Identification of project cost drivers and analysis of financial awareness amongst project teams for cost reduction purposes in Halliburton Pipeline & Process Services Scandinavia
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This Master’s Thesis describes the financial awareness amongst the onshore project teams in Pipeline & Process Services (PPS) Scandinavia, a Sub-Product Service Line (PSL) of Halliburton. Financial awareness is in this Thesis defined as knowledge of project revenue, cost and profit and the aspects that can affect these. This includes project management, contract formats, cost estimation, cost control, change management and cost drivers. The ongoing cost savings in the Norwegian petroleum industry have led to an increased focusand awareness of costs amongst the majority of the suppliers and subcontractors in the market. To be able to keep the position in the market and to have a profitable business Halliburton PPS Scandinavia is required to reduce project costs. To accomplish this it is important that all employees are aware of how they can contribute to increase revenue and reduce costs. The main goal of the Thesis is to identify suggestions for improvement and recommendations to increase the financial awareness amongst the project teams to reduce project costs in Halliburton PPS Scandinavia. To describe the financial awareness a survey has been distributed to the team members of four project teams inclusive of support personnel. Follow-up interviews have been performed with personnel assumed to be in key roles to obtain more information related to the topics of the survey as well as identifying suggestions for improvement to increase financial awareness and reduce project costs. In addition to this a Case Study of a project has been described to identify cost drivers and cost overrun by performing a financial analysis. From this, suggestions for improvement to reduce costs have been identified. The theory of the Thesis describes project management and financial aspects of a project based on existing literature and how this is applied in Halliburton PPS Scandinavia. This includes contract formats, estimating and budgeting, cost control, change management and project cost drivers. The literature has been used for analysis of the results from the survey and the interviews and will support the recommendations to Halliburton PPS Scandinavia. The Thesis concludes that the financial awareness amongst certain project team members should be increased to be able to reduce project costs, with knowledge, training and visibility being important factors to accomplish this. The Thesis Problem Statement has been answered by the recommendation of 37 suggestions for improvement based on the information about HalliburtonPPS, the theory, the Case Study, the results from the survey and the interviews, as well as the analysis. They have been critically evaluated based on the knowledge obtained through this study and are considered to be important to increase the financial awareness amongst the project teams to be able to reduce project costs in Halliburton Pipeline & Process Services Scandinavia. However, they should be verified by the PSL management prior to an implementation. Some of the recommendations will be easy to implement, while others may require more planning. One of the most important suggestions for improvement is to provide PSL specific financial training to technical personnel for them to understand how they can contribute to increase revenue and reduce costs. In addition to this a work method or a guideline for financial awareness should be created and made available to all employees through the Halliburton Management System. This document should present methods to increase revenue and reduce cost in all phases of a project, including what the different roles of a project team should be aware of, how they can contribute to reducing costs, as well as the typical cost drivers of a project. All of these suggestions for improvement will be important to increase the financial awareness amongst the project teams to be able to reduce project costs in Halliburton Pipeline & Process Services Scandinavia.
Master's thesis in Industrial economics