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Project Supply Chain Management - CORE · PDF file From logistics and supply chain management...

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  • Project Supply Chain Management

    From Agile to Lean

    A thesis to apply for the dr.ing. degree,

    at the Norwegian University of Science and Technology


    Bjørn Egil Asbjørnslett

  • ‘The fact that Alexander [the Great] so capably directed [the warfare’s] operation that logistics scarcely seems to have affected any of his strategic

    decisions. ... Supply was indeed the basis of Alexander’s strategy’.

    ‘Alexander where able to overcome these [logistics] obstacles where other

    armies had failed because of his superior abilities in gathering

    intelligence, planning, preparation, and organisation’

    (Engels 1978, pp.119 & 123).

  • Preface



    This thesis marks the end of a long research journey, with as in most projects, many unforeseen elements that have impacted and changed the approach of the research. Now at the end it is though fruitful to look back and acknowledge the process, as well as all support and help from colleagues and friends, without which this research would never have been possible.

    First of all I would like to thank Professor Asbjørn Rolstadås, my adviser on this thesis, for his contribution in providing the doctoral scholarship, valuable comments and guidance.

    I will also specifically thank Professor Marvin Rausand, for his help and contribution in bringing me into the academic ‘art’ of scientific publishing.

    Financial funding was provided by the research programme Project 2000, and many thanks go to the companies providing funding and a constructive research environment for this programme. I will also thank all my colleagues and friends in this programme for interesting and challenging discussions, as well as the social part. A specific thank goes to the programme co-ordinator, Halvard Kilde, for his inspiration, help, and for bringing me into contact with the European Institute of Advanced Project and Contract Management, Epci.

    From Epci I would like to thank Dr. Per Willy Hetland, Odd Instefjord, and Dr. Bjørn Kolltveit for their challenging and fruitful discussions, comments and guidance. It is not too much to say that they have had a great influence on this thesis.

    I would also like to thank all the people working in or related to the oil and gas supply chain that I have had contact with through this research, no name mentioned and no one forgotten. They have shared much knowledge and given me insight into an interesting and challenging context. Thank you.

    Finally, many thanks goes to you Grete, for your support and understanding during this period.

    Trondheim, November, 2002.

    Bjørn Egil Asbjørnslett


  • Summary




    More than forty years has passed since the start of the North Sea oil and gas developments. On the managerial side of the projects there have been large cost overruns, project planning and control measures developed to avoid these, initiatives to improve the industry’s competitiveness in the North Sea, as well as measures to improve the supply chains contribution in the projects. We have seen a focus first and foremost on the CAPEX side of the projects, which still is the public measure of a ‘project’s’ success as seen in medias coverage. However, the operation side of the project has been given extended focus, especially through life-cycle cost measures, and life cycle value measures trying to balance out the CAPEX, OPEX and income sides of the project to obtain the most commercial value enhancement from each project. At the same time there has been an increasing focus on the core business among the project demand and supply chain actors in this industry as in most other industries.

    Our belief is that this necessitates an enhanced focus on the project demand and supply chains of the industry, both for the projects development and operations phases. A question is whether the project demand and supply chain developments are approached appropriately according to the characteristics of the industry’s project context?

    Research topic

    This research commenced with an initial assignment of ‘looking into logistics and logistics management in the project context and as part of project management’. The project context addressed here is that of the oil and gas industry, i.e. the development and operation of an object where the production by that object generate income for the owner(s) of the oil and gas reserves, while taking part in development and operations of the object generate business for the supply chain actors.

    The focus on logistics and supply chain management in most industries is as means for improving the competitiveness of the industry or companies. This is the same for the oil and gas industry. Therefore, an approach to supply chain management in the project context of the oil and gas industry should aim to address logistics’ contribution to industrial competitiveness in the oil and gas industry.

    The objective of this thesis is to bring a contribution to the project management of large-scale development and operation projects from concepts and thoughts within logistics and supply chain management. The objective is to develop and outline supply chain management within the project-oriented context as a particular and conscious knowledge area of project management. Through developing a concept that approaches projects and project management from a logistics and supply chain management perspective, and through outlining what is important/specific for logistics and supply chain management within the project context. The objective is as such related to developing conceptual and methodological frameworks that may be used as basis for specific developments and application in specific industrial and project-oriented


  • Summary


    contexts. The objective is as such not to develop and give specific solutions to specific problems.

    Perspective for addressing the research topic

    The added value of logistics and supply chain management in general is found within the logistical mission elements, namely the supply chain cost and service position achieved through the ‘best’ alignment of supply and demand. Then to approach logistics and supply chain management within the project context, we have three conditions that our perspective rests on;

    - The project as the business opportunity.

    - The supply chain as the competitive entity.

    - Competitiveness through logistics and supply chain management, focused on alignment of supply and demand.

    The project is regarded as a business opportunity, where each actor will make business out of it and gain from participating in it. It is also assumed that a project will not be realised if it is not possible to make business out of it, i.e. it is not a realisable business opportunity. Though, technology, competence, capability and capacity of the supply chain actors organised into the specific project supply chain construction, is what may make the project available to realise as a business opportunity. Therefore the project supply chain may be regarded as the competitive entity. Competitiveness or value enhancement for the project, through the supply chain is assumed to be achieved through logistics and supply chain management, specifically through the logistics aim of alignment of supply and demand.

    Scientific approach

    The approach taken in this research follows Arbnor and Bjerke’s (1997) system approach. They say that the systems approach is related to determining the type of a system, by characterising and categorising the object under study, in our case the ‘system type’ of logistics and supply chain management in the project context of the oil and gas industry;

    Following Arbnor et al.’s definition of the systems approach our aim of this study is;

    To determine the type of the system (from a logistics point of view)

    To describe the system (from a logistics point of view)

    To guide in approaching how we see the system (from a logistics point of view).

    The scientific approach to this research is based on theoretical studies and open sources of information, interviews with representatives from the industry, and participation in meetings and workshops related to the research topic.


  • Summary


    Theoretical platform

    Our theoretical platform is based on theory from the domains of project management, logistics and supply chain management, manufacturing theory, and theory related to vulnerability and robustness.

    From the project management theory we have focused on the aspects of the project, such as the project context, the differing characteristics of the project life cycle, and the element of uncertainty in projects. Further the theoretical focus has been on the choices that has to be made in the project processes of determining ‘what to do’, i.e. the scope of work of the project, and ‘how to do it’, i.e. the projects development and execution model, and how these set different alternatives for approaching a project. We explore three different strategies for undertaking a project development, as well as establish a project atlas that may be used to explain and

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