Exploring the competitive state of practices in a project environment: issues, challenges and recommendations based on an industrial case

Abstract

Actors in the Norwegian oil and gas sector are under siege. Competitive positions are being challenged and many companies experience fundamental issues in terms of profitability, efficiency and order inflow. In parallel, observations point towards projects on the Norwegian shelf being subject to severe delays, cost overruns and quality deviations. Globalization, a high cost level, shortcomings in practices and scarcity of competencies are some attributors to the current circumstances, but this is only scratching the surface. This research has looked closer at prominent difficulties a particular Norwegian oil service company experiences in work with one of its framework agreements. Through a series of interviews and subsequent analyses, several greater issues were uncovered that impede project work and limit competitive potentials. Predominant effects were seen as reduced efficiency and productivity, and augmented difficulties in terms of realizing projects and creating value. Under contract rigidness and advantageous potentials facilitated by organizational capability and shared value principles, four challenges were established to set direction towards a competitive edge. These focused on improving profitability, shaping differentiation and strengthening the collaboration within the contractual network. Furthermore, a series of recommendations were developed in order to overcome established challenges, whilst simultaneously relieving some of the experienced issues. Expectancies of realizing the recommendations included qualities such as improved responsiveness, uniqueness, attractiveness, service quality, profitability, network collaboration and contractual relationships.