PETRO REFINERIES ASIA LTD: MANAGING RISK IN PROJECTS RESEARCH AND TEACHING NOTE

摘要

This case examines the nature and role of risk management in projects. The case describes the project undertaken by the company to set up a facility for processing of 'Special Cut Naptha' as a part of refinery #6 at PRAL. The project was initially delayed because of inappropriate contractor selection and the contract was finally awarded to an experienced vendor. The case begins with the General Manager of the refinery #6 Mr Thakur, expressing his angst at the delays and asking his managers to commission and start commercial production of the refinery at the earliest, i.e. tomorrow. He overrides the objections of the Sr Safety Manager and asks him to get the 'critical tests' done by tomorrow. The Chief Production Manager Mr Chowdhary is the main protagonist and he is unsure whether to take charge of the new project and start commercial production.The case discusses three major issues1. Internal Audit of various checks and risks involved in the project, and also the stage gate process which is followed to mitigate risk in such projects. Since the project is funded through internal accruals and thus no external audit of safety and construction and erection activities is scheduled.2. Issues related to the three category of risks in an organization, with the procedural risks (related to standard operating procedure) having a direct impact on the career of the managers. Mr.Chowdhary faces the dilemma of whether to follow the orders of the General Manager who is also the officer who evaluates his performance.3. Issues related to competence certification are discussed here, and the requirement of differentiating technical skills internally is raised.The case ends with Mr Chowdhary considering whether to accept the charge of commissioning the plant next day without all the pre-commissioning checks being carried out as per established procedure. The case provides an interesting twist of an alternate solution to the dilemma faced by Mr Chowdhary.