The oil prices have been reduced significantly in the last months. The price of a barrel of oil has been cut roughly in half since June 2014 which is almost reaching the deepest levels of during the 2009 recession. Due to the last reductions in oil prices many of the oil companies have faced financial problems. Reduction of cash flow from oil production affect the ability of the producers to fund operations, pursue existing projects and initiate new projects. This will consequently affect the other companies active in oil projects including offshore related companies. It seems that this situation will continue in the upcoming years and the companies need to adjust their vision and organizational and operational structures to combat the negative consequences.
Project management can help companies to face this situation better and planning, as the most important part of the project management, plays an essential role in this regard. To name a few, planning has the following advantages for organizations to manage the negative consequences:
1- Planning helps reaching objectives and goals
Using the planning in a project will help the management team to define and reach objectives and goals of a project easier. Project plans are made on the basis of the scope of the work and they have the complete view of the Product Break Structure (PBS) and the Work Breakdown Structure (WBS). By providing the project plan to top management team, they would be able to have better insight about the company’s operations and efficiently guide the project team to reach the objectives and goals of the company.
2- Planning increases efficient use of resources
It is important for the companies to use their resources efficiently during the upcoming years. Organizations will inevitably face resources limitations because of cutting the expenses. Planning provides the management team with a beneficial tool to utilize all of the available resources. By using the project plans the top management can allocate the resources in a way that the organization would reach the predefined objectives even during the hard periods. Resources productivity will also increase consequently. Softwares such as Primavera can provide management team with visualization tools such as S-curves and histograms which makes the resource allocation task even easier.
3- Planning gives direction
Planning provides the project team with a certain direction towards the project goals. By using the project plans all the employees in different departments will have a same guideline for their related operations and tasks. The activities, start dates and finish dates of them, the allocated man-hours and budgets and the milestones are clear for everybody and they will try to reach the predefined time and cost boundaries on the basis of the project plan.
4- Planning reduces risk and uncertainty
During the rough financial periods risk management gets special attention. Any uncertainty should be avoided otherwise extra undesirable costs will be generated. Planning helps to manage risks and uncertainties more efficiently. Using the project plan makes it visible what should be done, by who and when. In this way the risks can be identified in advance and specific measures can be predicted for them. Also, the responsible persons for each risk can be appointed which makes the risks manageable during the realization phase.
5- Planning provides control measures
One of the most important aspects of the planning is providing control measures for the management team. When a project starts, a project plan is made on the basis of the predefined budget and time goals and this plan will be used as the baseline for future controls. During the realization of the project, project manager and project controller check any deviation from the baseline and, if not favorable, try to make essential adjustments to get back on track. Without the usage of planning this is almost impossible or at least not easily possible. Techniques such as Earned Value Management (EVM) are very useful in this regard.
6- Planning is a competitive advantage
Considering all of the above mentioned aspects, planning should be seen as a competitive advantage for a company compared to the competitors. Companies which use planning in their organizations for their projects have better chance to deliver products and services to customers on time and in budget. Therefore, customer satisfaction would be more probable which in the long-term will lead to more reputation and growth.
In short, companies can use planning next to other management tools as a powerful preventive measure in this hard market situation. For sure, realization of the planning costs extra effort and attention which will pay back in future.