In the Oil and Gas industry, cost consideration is often overlooked during maintenance work execution.
Despite job descriptions mentioning cost awareness, there has been little genuine encouragement to do so. As Leif Babin states, "It's not what you preach, it's what you tolerate," and the industry has tolerated this lack of cost focus.
For example:
- Technicians identify equipment failures without considering job costs.
- Work scope validators focus on failure consequences, rarely considering execution costs.
- Job preparers prioritise ease and speed over cost-effectiveness.
- Approvers check details but seldom consider overall job costs.
Typically, only requisition approvers consider costs, but by then, it is often too late to prevent expenditure.
This cost oversight stems from four main reasons:
- The assumption that broken equipment must be fixed.
- Job costs are outweighed by potential production losses, though other industries manage to remain cost-conscious despite similar pressures.
- Cost focus is perceived as uninteresting, leading to inaction.
- Historical industry wealth has created a culture where cost scrutiny is not prioritised.
However, the industry is no longer high-margin, necessitating changes in cost control:
- Consider cost-effective repairs or preventative measures.
- Implement cost-effective solutions while accurately assessing production loss risks.
- Make cost focus a key part of roles and incentives.
- Recognise the industry's changing economics and maximise profits during high-margin periods.
The industry must ask, "How do we instil the recognition that high margins aren't guaranteed?" It is akin to someone accustomed to a life of luxury struggling to adapt to new financial constraints. It’s hard to get the bus when you’re accustomed to a Range Rover.
This change, though unpopular, is crucial for the industry's survival.
Senior leadership must drive this shift, ensuring cost consideration in all work stages. Scopes should prioritise cost-effectiveness, even if it is not the quickest or easiest solution.
A past initiative a number of years ago with an operator proved this possible. Despite initial resistance, persistent focus on costs yielded significant benefits:
- Better cost awareness in work identification and execution.
- Cost-conscious job preparation.
- Prioritised corrective maintenance to prevent costly failures.
- Reduced over-purchasing.
- More targeted material procurement.
- A recognition that core resource is not free.
Though the initiative faded, it demonstrated feasibility. The industry must adapt to its new economic reality, trading its "Michelin Star budget" mindset for a more cost-conscious approach.
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