Cause and Effect Analysis of Risks of Refinery Developmental Turnkey Projects through System Dynamics Approach Case Study: Development Project of Third Distillation Unit and LPG (Liquefied Petroleum Gas) in Isfahan Oil Refinery

Subject Areas :

Arash Shadmanpoor ¹ , Mehrdad Nikbakht ²

1 - Department of Industrial Engineering, Najafabad Branch, Islamic Azad University, Najafabad, Iran
2 - Department of Industrial Engineering, Najafabad Branch, Islamic Azad University, Najafabad, Iran

Received: 2017-07-19 Accepted : 2017-10-02 Published : 2017-05-01

Keywords: Risk Management, Cause and Effect Analysis, Feedback Loop, EPC or Turnkey Projects, Isfahan Refinery Development and Revamping Project,

Abstract :

Project managers are grappling with a variety of risks today as a result of increasing complexity anddynamics of projects in different stages of project life cycle. Thus, it seems quite necessary toemploy an efficient risk management process that can overcome the shortcomings of traditionalmethods in order to handle such complexities and reach the optimal project management. Thismatter is even more important in large scale and complicated projects such as EPC (Engineering,Procurement, and Construction) or turnkey projects where the contractor accepts totalresponsibilities. One of these new and powerful methods is system dynamics approach that can aidproject managers through identification, analysis and evaluation phases. One of the major strategicprojects of Isfahan Refinery Development Plan is the third distillation unit and LPG project whichis executed through EPC method. The study population consists of 18 experts and project managers examined using census method. To this purpose; a list of potential risks was prepared throughliterature review in the form of questionnaire to identify risks of mentioned project. Next, by usingcausal loop diagram (CLD), the cause-effect relationship between risks specified was explained.Applying experts’ opinions, the primary loop was validated structurally. Several feedback loopswere identified and analyzed deeply to determine the influential risks which affect all other risksdirectly or indirectly. Results show that some risks are more vital and critical for this project whichare: project management weaknesses, poor time and cost estimation, poor designs and plans,weaknesses in the procurement, incompetence at site manager and establishing communicationsbetween site personals and subcontractors poor performance. In the end, practical policies toimprove those situations were presented. To analyze questionnaire data, SPSS was used and toperform system dynamics approach, Vensim software was applied.