Quantifying Unknown Unknowns in an Oil and Gas Capital Project

Yuri Raydugin
Additional contact information
Yuri Raydugin: Royal Dutch Shell, The Netherlands, and Risk Services & Solutions, Inc., Canada

International Journal of Risk and Contingency Management (IJRCM), 2012, vol. 1, issue 2, 29-42

Abstract: Projects continue to fail at a high rate despite the well-known risk benchmarks published decades ago. Risk assessment and contingency planning are needed in oil and gas (O&G) capital projects because of many ‘unknown unknowns.’ Uncertainty must be estimated for the project schedule as well as for investment costs. Quantitative estimates and diagramming tools can assist in understanding and communicating project risk levels. This paper outlines and applies a method for quantifying unknown unknowns in the O&G industry based on a case study. Four dimensions of unknown unknowns are discussed: novelty of a project, phase of project development, type of industry, and bias. Uncertainty is classified as unknown unknowns, bias, known unknowns, and corporate risks. Practical recommendations are made to quantify uncertainty using probabilistic risk models, and then to integrate these estimates into the budget and schedule.

Date: 2012
References: Add references at CitEc
Citations:

Downloads: (external link)
http://services.igi-global.com/resolvedoi/resolve. ... 018/ijrcm.2012040103 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:igg:jrcm00:v:1:y:2012:i:2:p:29-42

Access Statistics for this article

International Journal of Risk and Contingency Management (IJRCM) is currently edited by Narasimha Rao Vajjhala

More articles in International Journal of Risk and Contingency Management (IJRCM) from IGI Global
Bibliographic data for series maintained by Journal Editor ().