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

Abstract

Project managers are grappling with a variety of risks today as a result of increasing complexity and dynamics of projects in different stages of project life cycle. Thus, it seems quite necessary to employ an efficient risk management process that can overcome the shortcomings of traditional methods in order to handle such complexities and reach the optimal project management. This matter is even more important in large scale and complicated projects such as EPC (Engineering, Procurement, and Construction) or turnkey projects where the contractor accepts total responsibilities. One of these new and powerful methods is system dynamics approach that can aid project managers through identification, analysis and evaluation phases. One of the major strategic projects of Isfahan Refinery Development Plan is the third distillation unit and LPG project which is 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 through literature review in the form of questionnaire to identify risks of mentioned project. Next, by using causal loop diagram (CLD), the cause-effect relationship between risks specified was explained. Applying experts' opinions, the primary loop was validated structurally. Several feedback loops were identified and analyzed deeply to determine the influential risks which affect all other risks directly or indirectly. Results show that some risks are more vital and critical for this project which are: project management weaknesses, poor time and cost estimation, poor designs and plans, weaknesses in the procurement, incompetence at site manager and establishing communications between site personals and subcontractors poor performance. In the end, practical policies to improve those situations were presented. To analyze questionnaire data, SPSS was used and to perform system dynamics approach, Vensim software was applied.