1. Uncertainty management in Statoil (Risk and opportunity management)
NSP
18 September 2001

2. Requirements for uncertainty management in development projects
AR005 - Project development in Statoil
Classification requirements for cost estimates and schedules
Practical guidance document
Recommended practices for uncertainty management in development projects

3. Presentation content
Uncertainty management trough project phases and decision gates
The qualitative uncertainty management process
The quantitative uncertainty management process
Presentation to management at decision gates
Findings and recommendations

4. Uncertainty management trough project phases and decision gates
DG 0: Decision to start feasibility studies (BoM).
DG 1: Decision to start planning (BoK).
DG 2: Provisional project sanction (BoV).
DG 3: Project sanction (BoG).
DG 4: Start operations (BoD).

5. The qualitative uncertainty management process
Tools :
Lotus Notes
PIMS
Uncertainty
identification
Continuous
process
Uncertainty
response
control
Uncertainty
assessment
Uncertainty
response
action

6. Presentation to management at decision gates (I)

7. The quantitative uncertainty management process
The quantitative uncertainty management process consists of performing uncertainty analysis on the value chain.
A value chain includes all the variables that affect the cash flow.
Each uncertainty in the value chain is described with a probability distribution and linked to the economical model.
Dependencies between variables are taken into account.
Uncertainty in project economy is calculated through Monte-Carlo simulations.

8. Principle poster of the value chain analysis

9. Presentation to management at decision gates (II)
The numbers in brackets correspond to different scenarios

10. Qualitative vs. quantitative uncertainty management
Continues
process
Information flow
Uncertainty management is a continues process through
all decision gates and project phases
Quantitative value chain analysis is mainly performed at
important decision gates.

11. Project ranking and portfolio management

12. Findings and recommendations The qualitative uncertainty management process
The project management team must have ownership and actively support the uncertainty management process
Uncertainty management must be established as a continuous process integrated in project management
Uncertainty management must be delegated to the line of responsibility
High focus and effort should be given to the implementation phase. A person responsible for facilitating the process should be appointed to secure sufficient attention
Uncertainty management must be on the agenda in regular meetings
Uncertainty management must focus on the total value chain and the lifetime perspective to secure an overall management of risks and opportunities
A practical detailing and structure is needed in order to reduce the number of uncertainties
uncertainty management must be supported by efficient methods and tools.
Experience transfer from other projects is important

13. Findings and recommendations The quantitative uncertainty management process
Keep the analysis simple
Treat uncertainties on an aggregated level
One person must be appointed to coordinate the process
Challenge the input from the different disciplines and search for dependencies
Make sure that the input corresponds to the uncertainty suppliers view (everybody is not familiar with statistics and statistical definitions)
Present the results from the analysis to the project and explain in simple terms the value chain and the effect of each input on the totality as a quality assurance of the model
Get a second opinion on the model to avoid effects of subjective interpretations
Use benchmarking to quality assure the results

14. Findings and recommendations Presentation to management at decision gates
Keep the presentation simple
Focus on findings, conclusions and recommendations
Highlight assumptions and framework conditions
Structure the presentation
Do not only present numbers and statistics
Make sure that the presentation is understood