BP survival (AAR Deepwater Horizon) - Dec.13, 2013
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A review of the BP Golf disaster, from an operations management point of view. This AAR of the Deepwater Horizon incident is meant to provide a clear view of what happened, why it happened and how that can be avoided in the future. A voice presentation can be found here: http://my.brainshark.com/Group-4-Final-Project-Strategic-Operations-12-13-13-270803347 - Dec.13, 2013
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BP survival (AAR Deepwater Horizon) - Dec.13, 2013
- 1. After Action Review of the Deepwater Horizon Incident MBA535 - Operations Management Prof. Dr. Samuel Rindell New England College of Business and Finance
- 2. Table of Contents Introduction What happened? – Process failures Why it happened? – Case facts Business Perspectives and Metrics Balance scorecard Strategy redesign Conclusions & recommendations References
- 4. Why it happened? - Process failures - Partnership with Anadarko Petroleum and MOEX USA Planned to tap natural gas and oil beneath the sea bed Expenses $96.2 million Estimated time of completion is 51 days Work started in October, 2009 Transocean contractor Cost and lease expense
- 5. Why it happened? - Process failures - Negative test pressures Bladder effect problem Failure of blowout preventer
- 6. What happened? - Case facts Impact of incident Financial Erosion of brand reputation and public confidence Increased regulations Summary of current position
- 8. Balance scorecard - part 1 Perspectives Metrics Business Process Perspective Customer Perspective Financial Perspective Learning/ Growth perspective Develop and monitor process safety through the proper use of leading and lagging performance indicators. Develop a safe operating culture across all levels of BP. Develop reporting requirements for managers and executives. Weekly/monthly reporting on progress and issues. Safety BP failed to track the progress in process safety management procedures. Safety should come before profits. BP fostered a culture that bypassed safety in the name of cutting costs. Accountability (Audit) BP failed to take accountability initially, instead focusing on assigning blame to partners Perception that BP and partners were more interested in passing off blame instead of fixing the issues. Creates negative perception, lingering financial impact from the accident. Table 1 BP Scorecard
- 9. Balance scorecard - part 2 Perspectives Business Process Metrics Perspective Learning/ Growth perspective Customer Perspective Financial Perspective Managing Risk Deepwater Horizon disaster illustrated a lack of risk anticipation. It was a significant management failure. There was extensive damage to wildlife and plants. Ongoing economic disruption for millions of people and businesses in the affected area. Clearly identify and assess risks of each Deepwater Horizon project. disaster price tag Conduct periodic risk will likely exceed review meetings. $40 billion. Establish explicit risk-based cost and time reserves. Leadership Failure to lead efforts to ensure safety procedures were being followed throughout the organization. Confidence shaken in executives, lack of faith in management team. Creates negative perception, lingering financial impact from the accident. Development and enforcement of safety procedures. Need to make safety a priority. Table 1 BP Scorecard
- 10. Balance scorecard - part 3 Customer Perspective Financial Perspective Learning/ Growth perspective Training/ Knowledge BP allowed partners to have inadequately trained staff work on Deepwater Horizon, leading to the accident. Customers view organization as inept and needing to improve. Cost savings of having inadequately trained staff now outweighed by recovery costs. Test the staff working on critical projects to ensure proper training. Fix training flaws as they arise through testing. Customer Service BP focused on stating the accident was not too bad and the negative impact to BP instead of customer issues. There was very little concern for the region given by top BP executives when the accident occurred. Negative perception of BP’s initial handling could result in lost market share for years. Develop customer and government feedback metrics to ensure proper communication. Public relations training and follow up. Perspectives Metrics Business Process Perspective Table 1 BP Scorecard
- 11. Balance scorecard - part 4 Business Process Perspective Customer Perspective Financial Perspective Learning/ Growth perspective Compliance/ Liability BP failed to follow established regulations and processes Perception of BP is of an unsafe nonenvironmentally safe company Costs of accident far outweigh increased compliance Establish more stringent guidelines and train all personnel on them Financial Metrics Cost cutting moves ended up actually costing at current time $42 billion of accident costs Customers perceive BP as chasing profits and not caring for environment Accident costs, reduced revenue and stock value have impacted negatively BP Spend more money on preventative measures to reduce large expenditures due to accidents Perspectives Metrics Table 1 BP Scorecard
- 12. Metrics - part 1 -
- 13. Metrics - part 2 - • Clearly identify and assess risks of each project. • Conduct periodic risk review meetings. • Establish explicit riskbased cost and time reserves. Risk Metrics and Recommendations • Development and enforcement of safety procedures. • Need to make safety a priority. Leadership Metrics and Recommendations
- 14. Metrics - part 3 - Training Metrics and Recommendations • Test the staff working on critical projects to ensure proper training. • Fix training flaws as they arise through testing. Customer Service/Public Relations Metrics and Recommendations • Develop customer and government feedback metrics to ensure proper communication. • Public relations training and follow up.
- 15. Metrics - part 4 - •Establish more stringent guidelines and train all personnel on them •Spend more money on preventative measures to reduce large expenditures due to accidents Compliance Metrics and Recommendations Financial Metrics and Recommendations
- 16. Strategy redesign - part 1 Transparency •Pro: Opportunity to rebuild trust •Con: Open BP open to more scrutiny •Timeframe: Immediately Reporting Safety Metrics Quarterly •Pro: Shows Transparency •Con: Setup Costs and Resources •Timeframe: Develop Metrics within 3 months, Reporting within 6 months Conduct rigorous risk review meetings with independent review board •Pro: Risk will be managed better •Con: Lucrative opportunities missed •Timeframe: Search for independent board immediately
- 17. Strategy redesign - part 2 Show Leadership with safety compliance •Pro: Develop safety as a culture from top down; Less accidents •Con: Longer project time/diminished results •Timeframe: Immediately Develop training program for complicated projects •Pro: More knowledgeable staff •Con: Higher costs; More resources •Timeframe: 12 months to develop and implement Adhere to government regulations •Pro: Eliminate potential fines and restrictions •Con: Likely to limit production •Timeframe: 3 to 6 months to develop plan Increase spending for safety and compliance programs •Pro: Shows commitment to safety; better safety performance •Con: Increased costs; Restrictive in nature •Timeframe: 6 months to identify opportunities
- 19. References Associated Press. (2011, April 22). Gulf oil spill worsened by poor training: report. Retrieved from: http://www.cbc.ca/news/world/gulf-oil-spill-worsened-by-poor-training-report-1.1025794 BBC News. (2011, January 6). US ol spill: ‘Bad management’ led to BP disaster. Retrieved from: http://www.bbc.co.uk/news/world-us-canada-12124830 BP (n.d.) Safety. Retrieved from: http://www.bp.com/en/global/corporate/sustainability/safety/preventing-and-responding-toaccidents-and-oil-spills.html Blackden, R. (2013, February 26). Gulf of Mexico disaster caused by ‘classic’ failure of leadership at BP. The Telegraph. Retrieved from: http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9896230/Gulf-of-Mexico-disastercaused-by-classic-failure-of-leadership-at-BP.html Cleveland, C. (2013, February 22). Deepwater Horizon oil spill. Retrieved November 25, 2013, from THe Encyclopedia of Earth: http://www.eoearth.org/view/article/161185/ Eaton, C. (2013, October 13). Oil spill legal worries still haunt BP investors. Retrieved November 25, 2013, from Fuelfix: http://fuelfix.com/blog/2013/10/13/oil-spill-legal-worries-still-haunt-bp-investors/ Greater New Orleans Inc. . (2011). A Study of the Economic Impact of the Deepwater Horizon Oil Spill. New Orleans, LA: Regional Economic Alliance Harrison, V. (2013, October 3). BP wins appeal against some Gulf claims. CNN Money. Retrieved from: http://money.cnn.com2013/10/03/news/companies/bp-court-win/ Ilacqua, C., Dr. (2012). MBA535 Operations Management, Week 4, Lecture 2 Script. Retrieved on Dec. 5th, 2013 from: https://necb.instructure.comhttps://necb.instructure.com/courses/1203530/files/43917493/download?verifier =7WIPBwes2IvUO1PmSoZJFQwj4btAxiIfvceZBPD2
- 20. References Johnson, S. K. (2012, December 4). How an all-star team put an end to the Deepwater Horizon oil spill. Retrieved November 25, 2013, from arstechnica: http://arstechnica.com/science/2012/12/how-an-allstar-team-put-an-end-to-the-deepwater-horizon-oil-spill/ Kaplan, R.S., Mikes, A. (2011) Managing the Multiple Dimensions of Risk: Part I of a Two-Part Series. Palladium Group, Inc. Retrieved from: http://www.thepalladiumgroup.com/KnowledgeObjectRepository/KaplanOnRisk.pdf Kroh, K. (2011). BP’s “Failure of supervision and accountability” caused the nation’s largest oil spill. Thinkprogress.org. Retrieved from: http://thinkprogress.org/climate/2011/09/15/319974/bps-failureof-supervision-and-accountability-caused-the-nations-largest-oil-spill-2/ National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. (2011). Deep Water; The Gulf Oil Disaster and the Future of Offshore Drilling. Washington, D.C. : National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. Pulsinelli, O. (2013, November 25). BP, judge trade barbs over Deepwater Horizon oil spill settlement. Retrieved November 25, 2013, from Houston Business Journal: http://www.bizjournals.com/houston/morning_call/2013/11/bp-judge-trade-barbs-overdeepwater.html Swenson, D. (2013, February 22). Possible causes of the Deepwater Horizon explosion and BP oil spill. Retrieved November 25, 2013, from The Times-Picayune: http://www.nola.com/news/gulf-oilspill/index.ssf/2013/02/graphic_shows_how_bps_deepwate.html Tharoor, I. (2010, June 2). A Brief History of BP. Retrieved December 7, 2013, from TIME: http://content.time.com/time/magazine/article/0,9171,1993882,00.html Webb, T. (2010, June 1). BP’s clumsy response to oil spill threatens to make a bad situation worse. The Guardian. Retrieved from: http://www.theguardian.com/business/2010/jun/01/bp-response-oil-spilltony-hayward
Editor's Notes
- Hello and welcome everyone!Today’s presentation is an After Action Review of the Deepwater Horizon Incident, meticulously constructed by the NECB Consulting Inc. groupto provide an insight to this prestigious Board into what happened, why it happened and what lessons were learned. Recommendations will be made accordingly, at the end of our presentation.
- Here are our main talking points.
- The goal of this presentation is to help BP regain some of its position and improve sales in the market place. In evaluating the operations of BP, our team will investigate the issues impacting BP after the Deepwater Horizon accident. From an operations management perspective, we will be reviewing what went wrong leading up to the accident and pinpoint where BP stands now, years after the accident. We have utilized analytical methods such as the Balanced Scorecard to better assist us in portraying BP’s current state of affairs. We will analyze BP’s performance through the Balanced Scorecard. To conclude our presentation, we will consider possible options and outline recommendations that we believe will help BP regain its position in the market place.
- BP was the developer of a prospect oilfield named Macondo, located approximately 50 miles southeast of the Mississippi River Delta. BP, in a partnership with Anadarko Petroleum and MOEX USA, designed a plan to tap into a large reserve of natural gas and oil that had been found in that area beneath the sea bed. The original plan called for a well to be dug at an expense of $96.2 million, with an estimated time to completion of 51 days. Work on the well began in October 2009 by an offshore drilling rig leased from Transocean named Marianas (Cleveland, 2013).Marianas dug the well to a depth of 9,000 feet below the ocean’s surface, which was 4,000 feet below the seabed. To reach the oil and gas reserve required the well to be dug another 9,000 feet. In November 2009 Hurricane Ida damaged Marianas and the rig had to abandon the well and return to shore for repairs (National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, 2011). Another offshore rig, Deepwater Horizon, arrived at the Marcado site in January of 2010 and took over the drilling of the prospect well. Both rigs were owned by Transocean and leased to BP. Transocean was the world’s largest contractor for offshore drilling rigs. Transocean’s fleet of rigs was responsible for revenues in excess of $11 billion per year. Transocean had further strengthened their place in the market by merging with GlobalSanteFe in 2007. The company was well known and had an excellent reputation for safety. Deepwater Horizon cost $350 million to build and was leased to BP for almost $1 million per day. The well was dug to the desired level, and at this point the decision to cap the well for later production was made. To facilitate this, contractors from Halliburton, Sperry Sun, and M-I SWACO were tasked with capping the well with concrete plugs (Cleveland, 2013).
- On April 20, 2010, Halliburton contractors completed concreting and BP began doing several tests to determine the integrity of the well. A contractor, Schlumberger, had a team onsite to conduct a cement bond log test on the well to help determine integrity. BP officials determined that the cementing had gone well enough to eliminate the need for this test. BP sent the Schlumberger team home on a helicopter to save a $128,000 fee (Swenson, 2013). BP conducted several negative pressure tests on the well. Test results indicated there was still pressure in the well line. A Transocean employee explained the problem with the readings as a “bladder effect” and was not a cause for concern. Based upon this recommendation, a cement plug was set 3,000 feet below the ocean surface. At the time of the explosion, 126 personnel were onboard the Deepwater Horizon. Eleven crew members were never found and presumed dead. The fire was not contained, causing the Deepwater Horizon to sink on April 22, 2010. Due to the failure of the blowout preventer, the well gushed oil into the Gulf. Several BP attempts to cap the well failed. Approximately 4.9 million barrels of oil escaped into the Gulf before it was capped on July 15th. The planning and execution of the capping was performed by a team from the U.S. Government (Johnson, 2012). There were substantial ecological and economic ramifications from the spill. The oil spill curtailed local fisheries production and impacted tourism in the region. The Gulf Coast region suffered brand damage, as well as additional economic losses due to a moratorium placed on drilling in the wake of the explosion (Greater New Orleans Inc. , 2011). The spill resulted in civil liability and criminal charges for BP and its partners.
- The Deepwater Horizon Incident has had far reaching effects on BP. This includes negative financial impacts through settlements, fines, and loss of revenue. The cost cutting measures taken have come back to hurt BP. BP has booked a total charge of over $40 billion for the Deepwater Horizon accident, and could revise that figure upward as costs continue to mount (Harrison, 2013). BP also has suffered an erosion of public confidence. There was a perceived lack of urgency from BP to deal with the situation that occurred. While BP was working to cap the well and stopping the oil flow, BP’s top executive’s dealings with the press actually created additional pressure on the company. It gave a perception that BP was not interested in the plight of those impacted by the disaster. This negative perception was exacerbated by the impression that BP was a foreign company that was not concerned with the economic and environmental impact on the United States. Offshore drilling was already a highly regulated industry. These regulations resulted in increased costs and decreased productivity as countless approvals were needed for permitting. The Deepwater Horizon incident has led to additional regulatory oversight, especially focused on BP due to the history with safety related incidents. BP has ended up in a position of trying to repair their image, particularly in the Gulf Coast region. The explosion and oil spill has caused a great deal of damage that requires actions from BP to show that they are committed to the region and the United States.
- In order to be able to make the appropriate recommendations, we will be reviewing the main metrics that impact the 4 perspectives: Business Process Perspective, Customer Perspective, Financial Perspective and Learning/Growth perspective.
- SafetyThrough our research, we have found that BP fostered a culture that bypassed safety in the name of cutting costs in order to be on budget. Testimony in court showed that BP did not institute safety procedures on the Deepwater Horizon (Blackden, 2013). Despite being an active participant in industry efforts to develop process safety indicators, one of the main causes of the accident can be blamed on BP's failure to track the progress in process safety management procedures. Several procedures required by the Clean Air Act to reduce the possibility of an explosion similar to the one that happened in the Gulf either were not followed, or had not been established in the first place. AccountabilityAnother major reason that contributed to the environmental disaster is the lack of accountability within BP. A joint United States Interior Department-Coast Guard investigation found that BP was “ultimately responsible” for the catastrophe because it had sought to cut costs and save time at the expense of safety (Kroh, 2011). The same report also cited key failures on the part of BP project partners as contributing to the blowout. It would appear that safety policy and procedures were not carefully monitored by any of the partners for the project, resulting in finger pointing between all of the involved parties. This gave the perception that BP did not take responsibility for their part of the disaster, instead spending time and resources trying to deflect.
- Managing RiskFrom a business perspective, the BP Deepwater Horizon disaster illustrates a lack of risk anticipation. BP voluntarily took on a risky project to drill through one mile of water to reach oil deposits two miles below the ocean floor. For BP, the outcomes of risk management operations failure included the death of 11 workers, the spill of more than 4 million barrels of oil into the Gulf, extensive damage to wildlife and plants, and economic disruption for millions. The National Commission’s Report to the President attributed the disaster to a significant management failure that crippled “the ability of individuals involved to identify the risks they faced, and to properly evaluate, communicate, and address them.” (Kaplan and Mikes, 2011)Failure of LeadershipThrough our research, we have found BP helped to create the crisis through continued failures of leadership leading up to and immediately after the explosion and spill. Top executives at BP did not show leadership in the area of safety. BP established policy that required the use of an operating management system (OMS) that CEO Tony Hayward described as the “cornerstone of safety” for the company. In court testimony, a BP executive testified that this OMS was not in place on the Deepwater Horizon leading up to the explosion (Blackden, 2013). With other explosions and oil spills on record for BP in the years leading up to the 2010 explosion, it appears leadership did not address these issues. Executives did not show leadership when it came to safety, instead concentrating on cost savings that would add to the bottom line and improve stakeholder’s returns. This leadership created a culture that led to this explosion.
- Training/KnowledgeAnother area that came up in our research of the Deepwater Horizon explosion and oil spill was with training flaws. A report released by the Coast Guard detailed flaws in Transocean's. emergency training procedures (The Associated Press, 2011). It is likely that the training flaws led to decisions made by workers that “may have affected the explosions or their impact” (The Associated Press, 2011). While this report detailed flaws of the rig operator, BP owned the well they were drilling on, so they also need to take responsibility for the operation and lack of training. Transocean stated that “the procedures being conducted in the final hours were crafted and directed by BP engineers and approved in advance by federal regulators” (BBC News, 2011).Customer Service/Public RelationsAnother area BP failed in during the crisis was with customer service and public relations. These failures mirror their lack of accountability. There was a perceived lack of urgency from BP to deal with the situation that occurred. While BP was working to cap the well and stopping the oil flow, BP’s top executive’s dealing with the press actually created additional pressure on the company. Insensitive and ill-timed comments from CEO Tony Hayward undermined hard-working BP representatives trying to help fix the problems in the region caused by the spill (Webb, 2010). Communication such as this focuses the public and government on the insensitive comments instead of on the detailed progress BP was making on fixing the problem. “Communication over the extent of their responsibility and the consequences may run the risk of aggravating an already skeptical public if not carefully handled” (Webb, 2010).
- ComplianceThrough our research, we have evidence that BP was not diligent with compliance issues. Testimony in court showed that BP did not institute safety procedures on the Deepwater Horizon (Blackden, 2013). BP was required to have adequate response plans for spills pursuant to the Oil Pollution Act of 1990. The plan that BP had was a broad overview of a response to an ordinary oil spill and did not address the unique and specific issues surrounding the drilling site. The BP plan was completely inadequate. Federal agencies had largely relied on the industry to self-regulate themselves. A commissioned report of the oil spill found that the government agencies failed to conduct a review of the site’s well permit under the National Environmental Policy Act (NEPA). The federal government recognized its failure to oversee compliance in offshore drilling and made sweeping changes as a result of the Deepwater Horizon incident. Financial ImpactAs we have seen throughout our research, BP was concerned with costs more than safety on the Deepwater Horizon rig. This hurt BP greatly. BP has booked a total charge of over $40 billion for the Deepwater Horizon accident (Harrison, 2013). While cost cutting makes sense in some situations and is important for the financial performance of the company, BP needs to invest in safety and environmental issues.
- Safety Metrics and RecommendationsIn order to effectively prevent and respond to unforeseen accidents and oil spills good tracking of the safety management process is indispensable. For that to be achieved, our recommendations for BP going forward are to:Properly use leading and lagging performance indicators. Per BP (n.d.), “leading indicators focus on the strength of our controls to prevent incidents, these include inspections, reducing overdue maintenance and corrective actions and tests of equipment critical to process safety. Lagging indicators record events that have already happened, such as oil spills or losses of primary containment.”BP should develop deep capability and a safe operating culture across all levels of BP through reporting requirements for managers and executives. To ensure that this is occurring, the safety metrics monitoring performance are reported quarterly to the group operations risk committee.Accountability Metrics and RecommendationsOur recommendation for BP going forward to address the lack of accountability issues include:Develop reporting requirements for all levels of project and division management to be tracked and reported in metrics. To repair the damage done by BP, the company will need to be pristine going forward. Requiring managers to report weekly/monthly on project progress, safety, and environmental issues will help BP get a grasp on performance in these areas. Be transparent with results. BP needs to prove to the public that they are committed to safety and environmental issues. Gathering data on performance in these areas as noted should not be problematic. BP does need to be honest with the results. If there are issues, BP should own the issues and detail how they will be addressed. This will help BP to regain a level of trust.
- Risk Metrics and RecommendationsOur recommendations for BP for risk metrics include:Clearly identify and assess risks at the beginning of and throughout every project.Conducting periodic and rigorous risk review meetings with an independent risk review board that actively challenges project engineers’ risk assessments.Establish explicit risk-based cost and time reserves.Leadership Metrics and RecommendationsOur recommendations for BP going forward to address leadership issues include:Developing metrics that reinforce BP safety compliance procedures. Part of why the explosion occurred appears to be related to the lack of oversight in implementing safety systems on the oil rig. Making safety a priority needs to be as important as profits, as BP cannot afford another incident like this. Top executives need to lead these efforts and hold BP workers and contractors to strict safety standards. Strict adherence to safety initiatives and transparent leadership will help BP regain public confidence.
- Training Metrics and RecommendationsOur recommendations for BP going forward to address training issues include:• The testing of staff working on projects requiring high levels of safety. Managers, engineers, and workers associated with drilling projects need to prove that they have the knowledge and skills to handle the responsibilities associated with their roles. Ongoing testing and oversight checking for proficiency can show that BP has the right staff in place for these projects. In addition, this type of review can provide indications that there are training flaws that need to be addressed. Should flaws arise, BP needs to commit to aggressively addressing them to ensure proper training is provided to all workers.Customer Service/Public Relations Metrics and RecommendationsOur recommendations for BP going forward to address the customer service/public relations issues include:Developing customer and government feedback metrics. BP needs to look at repairing their damaged reputation, so it makes sense to gather feedback from those that they are servicing and working with. BP would benefit from not just being compliant in a regulatory sense, but by being a leader in the communities they work in. Provide public relations training and follow up reviews of top executives. BP compromised the hard work of many employees trying to fix this situation by making inflammatory remarks. A metric tracking the performance of BP executives and staff that interact with the public would help gauge if you have potential communication problems.
- Compliance Metrics and RecommendationsOur recommendations for BP going forward to address their compliance issues include:Be in compliance with as many State, Federal, and International laws and regulations as possible. BP cannot afford to be caught not being complaint with governmental agencies, so every effort needs to be made to ensure compliance is achieved.Develop metric to measure performance to ensure there are zero incidents of negligence. BP needs to hold themselves to a higher standard than government regulators at this point in time. While governmental review has been substandard, the expectation is that will change in light of this incident. BP needs to review compliance measures to ensure there are no issues. Financial Metrics and RecommendationsOur recommendations for BP going forward to address financial metrics and investment include:Increase safety and compliance spending. BP needs to show that they are committed to safety and mitigating risk. Increased spending in safety projects would help to lessen the possibility of disasters in the future.Contain costs in other areas to remain profitable. With the Deepwater Horizon costing BP over $40 billion to date, the financial impact will linger for years. BP will have to resist cost cutting in areas of safety and compliance, so other areas will need to be considered.
- Next, we’d like to discuss strategy redesigns for BP. The first recommendation we are making is for BP to be transparent. BP needs to prove that they are committed to improving their operations so another accident like the Deepwater Horizon does not happen again. Being upfront and honest regarding operations, safety, and risk would start to rebuild public trust. By being transparent, this would open BP up to more scrutiny of their practices, so they would need to be aware of all operational functions and if they are performing the way they should. BP should look to start transparency immediately.Next, we recommend that BP develop safety metrics for their operational functions and report them on a quarterly basis. This can be done in concert with the publishing of quarterly financial results. The reports would show progress in safety performance, as well as detail potential areas that need to be improved upon. This will be beneficial to all levels of management within BP, particularly operations. It will also inform stakeholders and the public how BP is progressing. The benefits of publishing such reports are that it gives a level of transparency that we feel BP needs at this point in time. BP would have to incur some setup costs and dedicate resources to compile and report this data, but we feel it will provide value to the organization. These metrics should be developed within 3 months, with the first reports available for publishing 3 months after implementation.Next, we feel that to deal with the risk assessment and risk management issues BP has experienced, it is necessary to develop rigorous risk review meetings. These meetings should include BP operations managers, top executives, and members of an independent review board. The independent review board will help to balance these meetings and reel in overly aggressive project ideas. These meeting would allow BP the opportunity to manage risk better, helping to make them a safer operational company. There is a potential of not capitalizing of lucrative opportunities. The search for an independent board should begin immediately.
- Next, BP management needs to show leadership with safety compliance measures for their operations groups. Management has to change the culture within the company to not accept overly risky endeavors. By managing safety from the top down, BP will help to instill a culture that takes safety into account. This will help lead to safer projects and less accidents. These safety measures will likely create longer project timeframes and potentially diminish results due to the focus of safety. This should begin immediately.Another issue BP had was with training. In order to ensure all rig workers and managers are educated about all safety issues involved with operations, BP needs to develop an extensive training program for these complicated projects. Having a more knowledgeable staff will help create a safer, more efficient operation. It will help instill confidence in management that they have the right people working on these projects. These programs will increase costs and require more resources and trainers, but the benefits outweigh these extra costs. BP should invest in this program to make sure the training to extensive. We believe 12 months is a good timeframe to develop and implement this program.BP should strictly adhere to government regulations. This will help to ensure that there are less safety and environmental issues. Striving towards being compliant to regulations will help to eliminate potential fines and restrictions that could be imposed. Adhere strictly to regulations will potentially limit production, so this should be accounted for. BP should quickly develop a plan to adhere to regulations, taking 3 to 6 months to do so.Lastly, BP would benefit from an increase in spending on safety and compliance programs. This type of investment would make BP a safer company. It would show the public and government agency that there is a commitment to safety and operational improvements. BP should determine where this spending would be most beneficial within 6 months, then commit to programs established from this spending.
- Inconclusion, we feel that with the development of reporting metrics will allow BP to identify and report areas of improvement. Finding ways to improve with transparency, safety, risk management, and leadership will help BP to repair the damage done to the organization with the Deepwater Horizon accident. On behalf of our group, I would like to thank you for viewing our presentation.