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This page is devoted to news, tips, and any other information the Project Management community may find useful or interesting.

BP Update, November 10 2010

Tony Hayward, the ex-CEO of BP, was interviewed by the BBC about his role in the Gulf oil-spill and his subsequent replacement as CEO by American Bob Dudley. The interview hasn't aired as yet but the BBC has posted some excerpts on their web site. These excerpts are "teasers", designed to entice the viewer into tuning in to the full interview and not necessarily representative of the entire content. The parts of the excerpt that I found intriguing were the bitterness that Hayward felt towards the media, and BP's lack of a contingency plan to deal with the leak.

Let's deal with the media issue first. Hayward is perhaps justified in criticizing the media for the way they focus on the story of the day and feature the most lurid aspects of the story in prime time news. Certainly, the amount of attention focused on the Chilean miners who were recently rescued from a mine collapse illustrates the media approach. The story was featured on TV news in both North America and England for days on end. Every day the lead story seemed to be about the latest development: someone's girlfriend showed up at the site and their wife stayed away, what they were eating, and on and on. The attention focused on the story seemed out of proportion to its impact on world news, yet stories with a seemingly greater impact on the world were elbowed off the stage in favour of the Chilean miners' story. Even after the rescue was effected and the miners safely above ground, the TV stories kept coming.

Tony should remember two things about the media: number 1, the media will report on events they think will capture the public interest because their ability to sell advertising is directly dependent on the number of viewers that tune in to their news casts and number 2, the most anyone can expect from the media is that what they report, they report truthfully. The media feeding frenzy that Tony Hayward refers to is bound to happen when one network identifies a story they believe will draw viewers and other networks are made aware of it. If the first network to pick the story up is a reputable large network, other networks have a choice to make: assume the first network is correct in their assessment of the story and give it the same amount of attention, or assume they are wrong and don't report it, or give it much less prominence. The worst that can happen in the first case, if they are wrong about public interest, is that they will suffer the same loss of viewers as the first network. The worst that can happen in the second case is that the first network reporting on the event, and any other that gives the story the same prominence, will draw viewers away from your news report. Given the pace that news events hit the evening news, decision windows are brief and the stakes high. Even if a mistake is corrected the next day, the loss of viewers may be permanent.

Of course, none of this is news. Newspapers were taking a similar approach to reporting news events of the day long before the advent of BBC or CNN. Big papers were battling one another in the last century. Their competitive approach to reporting and the way they sensationalized stories was dubbed "yellow journalism". Granted, yellow journalism also distorted the news they reported but one of the ways in which distortion was accomplished was the exaggeration of comparatively minor stories to turn them into front page news. Sometimes there seems to be an element of this in the way TV networks handle news stories.

None of this is news to major corporations such as BP who have entire organizations devoted to manipulating the way the media report on events involving them. These folks attempt to have stories that paint their corporations in a positive light featured as prominently and as favourably as possible while suppressing negative stories or putting a positive "spin" on them. If Tony wasn't aware of the way this story was going to be treated by the press, he had only to consult with his PR organization to find out.

In fact Tony indicated during the interview that he understood the reaction of the media. "I don't feel like I've been made a scapegoat, I recognised the realities of the world we live in." " In some senses it comes with the patch and you simply have to take the rough with the smooth." Tony appears to be facing up to the fact that he was aware of the attention he could expect from the media and failed to deal with it properly. The attention that he objects to is his vilification. The vilification occurred when he took time off to go sailing in the midst of attempts to stop the leak and his statement that he wanted his life back. These weren't the only gaffs he made, he was also quoted as referring to the local victims of the disaster as "little people", a remark that did not play well with the American public.

The fact is that when you are responsible for a major project such as the Deepwater Horizon oil well, you have to be prepared for the full glare of the media if something goes wrong. As Tony Hayward says, "...it comes with the patch..." It is also true that Tony Hayward did not cause the spill himself and even BP is not solely responsible. They sourced some of the work to vendors who are also responsible. None of this gets Tony off the hook. He was the face of BP and acted as its spokesperson from the outset. That he was willing to take the heat and face the media frenzy reflects well on him. How he handled that attention and the negative impact it had on BP, does not.

This site (www.threeo.ca) deals with project management issues so I'll put this story in the context of project management. Remember that when you undertake to manage a project, you can expect the accolades if the project goes well. Expect the brickbats if it doesn't. You may not be personally responsible for the mishap, you may not even have been informed of it until your ability to respond effectively was severely restricted. Doesn't matter. As the project manager you are responsible for project results including any negative outcomes. Take your lumps and learn from the experience. You should always use the opportunity to conduct a "Lessons Learned" even if you have to conduct it alone. What went wrong? Why did it go wrong? What could I have done that would have avoided the negative outcome next time? How could I have improved on the way I handled the disaster when it did happen? Answering these questions will aid the maturation process and better prepare you for your next project. Remember the George S. Patton quote "I don't measure a man's success by how high he climbs, but how high he bounces when he hits bottom." Same applies to women. Don't sulk, or feel sorry for yourself. Learn from the experience and improve on your performance next time out.

The next part of the Tony Hayward interview I found interesting was his reference to BP's contingency plan. Tony felt that contingency plans were inadequate; "BP's contingency plans were inadequate. We were making it up day to day." Some comments on the internet refer to a crying need for ERM in BP's operations. While BP does not boast an ERM policy it does have a Health Safety, Security, and the Environment (HSSE) policy which sets standards for managing risks in these areas. The BP policy statement available on their web site makes no mention of any responsibilities that the Board of Directors or company officers might have in this area. As is the case with all policies, standards, and processes, if it ain't in writing you don't have it. It is difficult to say whether ERM would have been of any assistance in this case. It would definitely have elevated the importance of risk mitigation in the area of safety and the environment, if it did nothing else. It would not have identified the right strategies to prevent the accident, or the right contingency plan to deal with the disaster if it an accident did happen.

It is difficult for me to believe that no one at BP, or their vendors (e.g. Transocean who leased the drilling rig to BP), could have foreseen the consequences of a blowout. That's the whole point of the blowout preventer the rig is outfitted with. Add to this the fact that a 2002 safety inspection identified the blowout preventer as being non-compliant with BOE regulations. This is not to say that the rig was non-compliant when it was in use by BP, but it should have informed them that a problem with the preventer was a possibility. The fact that there was no effective contingency plan shouldn't necessarily shock us, but it sounds as though there was no contingency plan in place. The fact that there was a blowout and the preventer did not work as advertised illustrates that their mitigation strategies were not effective and that a contingency plan would have been a great help.

The blowout on the Deepwater Horizons oil rig was an extreme example of a risk event with a very high impact. 11 lives were lost, wild life in the gulf and gulf shore suffered greatly, and businesses dependent on the gulf were devastated. The $20Bn price tag of the disaster should put the impact into perspective, though that doesn't begin to define the impact of the 11 deaths. This disaster has taught me one lesson which should be applicable to any project. We are typically focused on a qualitative analysis of a risk event, answering the question "Which of these risk events has the potential for the greatest impact and should therefore have the highest priority?" If we take the time to examine the risk event scenario and estimate the costs of the various outcomes, we can derive an estimate of the cost of the event in dollars (a quantitative analysis). Do we want to do this for each of the risks identified for our project? Of course not. Should we do it for the events that we determine will have the greatest impact? I'd say it would be worth our while. We don't necessarily have to blow the budget on effort and expense to come up with an exact estimate, make the investment proportional to the impact and project.

Look at identifying a practicable contingency plan to mitigate the impact of a risk event that you are unsuccessful at preventing, especially when the impact of that risk event would be catastrophic. Rollback strategies that return the previous version of a software system is an example of what I'm talking about. No project manager worth their salt would dream of cutting over a new version of a mission critical software system without having a rollback plan. That project manager will go even further; they will test the rollback plan to ensure it will work in the production environment. Mitigation strategies that tend to reduce the possibility of a failure of the new system version will include system testing, stress testing, load testing, and performance testing. This two pronged approach should be considered for any high priority risk.

Risk management is all about business cases. Does the amount of the risk reduction exceed the cost of the mitigation strategy? (($risk impact x %reduction) > $ cost of risk mitigation) In the case of contingency plans, does the cost reduction the plan provides exceed the cost of the contingency plan? (($risk impact x %reduction) > $cost of contingency plan). The lessons the BP gulf disaster should teach a project manager is to carefully allocate the risk management budget to derive the maximum benefit. Don't hesitate to propose an increase in the budget to your sponsor if, in your estimation, you have a valid business case. You don't set the budget for your project so have to accept the sponsor's decision on whether your strategy is worth implementing or not, but you must make sure your sponsor has all the facts to make an informed decision, including any estimates of the actual cost of a risk event. If your sponsor declines to spend the money for your strategy, don't just assign responsibility to your sponsor and describe the mitigation strategy as "accept" in your risk register. Look for alternatives that might be a little less effective in dealing with the risk but will be less costly. Your project should have a Risk Management Plan which both you and your sponsor can live with. No one should be surprised at the outcome if the worst case scenario happens and your stakeholders should be prepared for the negative outcomes. I would say that certainly did not happen in the case of the BP gulf disaster.

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