Ernst and Young (which now likes to be known as ‘EY’) has released an analysis of upstream megaprojects. The 16 page document, ‘Spotlight on oil and gas megaprojects’ finds that as the ‘easy’ oil and gas is fast disappearing, megaprojects are the new normal. These include unconventionals, deepwater and the Arctic. EY’s survey of 365 megaprojects found that despite their impact on enterprise value and share price, many fail to deliver on time or within budget. Project delivery success is actually decreasing, especially in deepwater projects where 64% experience cost overruns and 74% are delivered behind schedule. On average project costs are 59% higher than initial costs estimates.
EY questions whether such excesses are ‘sustainable.’ Other research suggests that ‘non-technical’ issues are responsible for most overruns. A 2013 Credit Suisse study found that 65% of project failures were due to ‘softer’ aspects such as people, organization and governance. EY recommends project management tools and best practices using real time data throughout a project.
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