Understanding people risk – Part Two

Old problems

The much-discussed topic of the ageing human resource in oil and gas seems almost as old as the workforce itself. Nonetheless, it remains one of the key obstacles to obtaining and retaining the skills required for LNG projects and has yet to be tackled with any gusto. Indeed, the industry’s perennial failure to collaborate and invest in the skills shortage has proved to be a false economy.

The go-to tactics for recruitment and retention, such as increasing rates of pay, are short-term fixes for symptoms that do nothing to address the underlying cause. Increased labour costs mean increased project costs and constant price pressure in the supply chain. Moreover, this does not remedy the shortage of younger workers to draw on; in fact, it exacerbates the problem, as investment in training is typically one of the first budget items to be cut when paying for spiralling salaries.

This is borne out by research commissioned by Air Energi and conducted by Queensland University of Technology (QUT), which shows that small to mid-size companies are not matching larger organisations for spend on training. Combined with increased future demand, the net effect is to increase the risk that the required skills and experience are lost when the current workforce retires. The million dollar question then is how to retain the skills and expertise of the mature workforce and also pass them on to younger generations.

Workforce risks: identification and reduction

Due to the significant potential impact of workforce issues on LNG development projects, as well as on the wider oil and gas sector, Air Energi partnered with QUT to not only research the issue in detail, but to develop an advanced method for identifying and reducing people-related risks, as they relate to LNG projects dependent on a contingent workforce.

The research focused on workforce risk during the exploration, execution and demobilisation phases of major LNG projects, and identified risks that can be broadly categorised into the following six areas:

Compliance: includes meeting the legal requirements of local, national and international legislation, as well as internal organisational policies.

Recruitment: accessing and securing the appropriate talent efficiently and systematically.

Onboarding and induction: encompasses a wide range of tasks such as introductions and general orientation and also transmission of company culture.

Reassignment and demobilisation: the most fragile and highest risk area in terms of resources and time invested, relying as it does on contract workers to effectively complete a project.

Retention: vital for a variety of reasons, such as justifying training expenditure, nurturing expertise and retaining knowledge.

Project appeal: factors such as project duration, remuneration and benefits, location, employer brand, roster and project phase can all have a major impact.

The research drew on in-depth interviews with a panel of industry experts including representatives from operations, HR, project management, advisory functions and contractors in order to gain a wide range of perspectives. The use of QSR NViro 10^© ensured analytic rigour in identifying and exploring key themes, with analysis conducted by QUT’s leading industry experts.

The research findings have subsequently enabled the development of a comprehensive tool for identifying and analysing the potential workforce related risks for LNG projects. The tool will be available in Q2 of 2014.

‘Project appeal’

One of the more surprising findings unearthed by the Air Energi/QUT research is just how highly oil and gas professionals rank the attractiveness of a particular LNG project itself. Take location: considerations over safety, favourability of tax arrangements and the number of competing projects in this category all contribute to a professional’s assessment of a project’s appeal.

Other important aspects of project appeal include having a positive company brand and a reputation as an attractive employer, alongside more tangible benefits, such as the ability to offer long contracts, appealing rosters, substantial benefits, competitive rates and opportunities at an exciting phase of the LNG project lifecycle. A positive, stimulating work environment and attractive mix of contractors and staff also contribute to both project appeal and knowledge transfer.

If a project does not have that appeal, it becomes difficult to attract the right employees with the skills, temperament and experience required. This, in turn, leads to project requirements being unfulfilled, resulting in reduced output quality, more errors and ultimately project delays.

The key measure of success for an LNG development project, or any other large and complex undertaking, is the ability to safely deliver on time and on budget. Those responsible for delivering such projects in Australasia, or anywhere in the world, must now do their level best to mitigate this overarching risk. To do so, they need to think differently about how they identify and manage people-related risk, and have the right tools at their disposal to address this increasingly acute challenge with the appropriate level of rigour.

Written by Matt Smith, Air Energi, UK. Edited by Callum O'Reilly

Part One of this article is available here: 'Understanding people risk - part one'

Read the article online at: https://www.lngindustry.com/special-reports/13062014/understanding_people_risk_part_two_759/