Root Cause Analysis of Construction Oil and Gas Project Delays from Engineering and Construction Management Point of View Using Analytic Hierarchy Process (AHP): A Case Study for National Iranian Oil Company Projects

Ghashghaei Iman^1*, Salahshour Jamshid² and Feizollahpouri Mohamad^3
*Correspondence: Ghashghaei Iman, Department of Civil Engineering, Islamic Azad University of Yasooj, Iran, Tel: +98-917-140-4164, Email:

Keywords

Causes of delays • Increased time and cost • Construction projects • Analytic hierarchy process (AHP)

Introduction

One of the problems from which, most projects, whether constructional or non- constructional, suffer is the prolongation of the implementation period and the multiplied cost of completing the projects compared to the initial estimations [1]. Although it rarely happens that a project is completed within its specified time schedule, the timely completion of a project is considered as an indicator of the efficiency and success of the project. On the contrary, we have delays. Delay is an action or event that prolongs the time specified in the contract to perform a certain action. Then, the delay increases the total cost of the project, followed by the need to prolong the presence of human resources in the project. In general, delays are caused by various reasons, which are the result of the project elements functions. Basically, one of the goals of project management knowledge is time management. Since a lot of budget and large resources are often spent on construction projects, avoiding these delays is critical in completing the construction projects. For this purpose, it seems necessary to identify these factors and to classify them according to the importance and frequency of constructions [2].

Delay is one of the most important common phenomena in the construction projects of the country. In most of its constructional projects, Iran is also experiencing the delays occurred, and there have always been efforts to reduce these factors. Over the past decades, this phenomenon has occurred in simple construction projects to the most complex ones, such as petrochemical projects, dam construction, and nuclear power plants, so that the weighted average for the implementation of projects in the country is 11.1 years [3].

Because of the generality of the issue of project delays in all countries and its importance, many researches have studied the factors causing delays in construction projects and the mechanisms involved. For example, according to a report in 2001 in UK, 70% of governmental projects had been delayed [4]. In India, the research by the infrastructures and project monitoring department at the Ministry of Planning and Budget in 2004 showed that 646 projects worth more than $ 50 trillion dollars had been completed by about 40 percent delay compared to their due date of completion. These delays ranged from 1 to 252 months [5]. In the United Arab Emirates, where construction accounts for 14% of the gross domestic product (GDP), a study shows that 50% of construction projects are delayed [6].

The main indicators in success of the projects are their high quality and on time implementation, because in addition to spending more financial resources, for the reasons such as inflation and rising prices, the prolongation of the construction projects is accompanied by the impossibility of operation of the projects on due time. The delay of construction projects is one of the most important weaknesses in the civil engineering industry in all countries around the world, and studies have shown that, despite today's modern technology, due to delays, the completion date of most projects is still lagging their schedule. The compensation of delays and avoiding their reoccurrence in future projects involves identifying these delays and determining the contribution of each of the factors involved in the projects, which is far more complicated due to the uniqueness of each project. By studying the causes of delay in construction projects of the National Iranian Oil Company through various sources and researchers’ viewpoints, while highlighting the causes of delays in projects, we attempt to reveal the common grounds of delay in construction projects, so that delays in projects can be addressed by employers, consultants and contractors as a fundamental problem, and by providing appropriate solutions, the duration of projects is reduced. Finally, by taking into account the delays in construction projects when planning them, they can become as short as possible, and in the best and most ideal situation, even zeroed [7].

So far, various studies have been conducted on delays in construction projects, among which some have investigated the delays in a particular industry or country. Using these studies in this paper, we are going to summarize and compare the causes of delays in developed and developing countries.

Literature Review

Three aspects have been considered in the literature review of this paper. Firstly, investigating the causes of delays in oil and gas projects; secondly, large and costly projects, the delays of which cause problems such as increased costs and doubts in choosing the type of land use, and the last and most important aspect is the investigation of delays in public / governmental projects.

Basak and Coffey (2018) investigated the factors affecting the delay in large natural gas projects (case study: Australia). Using the five-point Likert scale, they assessed the frequency and severity of each of the risks caused by delays. The findings showed that 72% of the subjects believed that the delay in gas projects in Australia ranged between 10% and 30% [8]. Gebrehiwet and Luo (2017) investigated the impact of delays in large-scale construction projects based on Relative Important Index (RII) and correlation coefficient in Ethiopia. Public projects are mostly associated with the public-sector with the same management practices, and organizational structure, rules, and regulations. The results showed that the general common conditions will lead to major problems and delays [9]. Niazi and Painting (2017) reviewed the construction projects in Afghanistan, in which increasing construction costs is the most important problem of most of projects [10]. Simanjuntak and Mahendrawan (2015) investigated the factors affecting delay of oil and gas construction projects in Indonesia (Case Study of 2012 – 2013). A large number of oil and gas projects have failed in Indonesia during the schedule of the original contract. The delays in oil and gas construction projects were classified into several major factors based on the construction and engineering plan contracts [11]. Ruqaishi and Bashir investigated the causes of delay in construction projects in the oil and gas industry in the gulf cooperation council countries. The survey results showed that there was a high level of agreement among project stakeholders including employers, contractors and consultants on the causes of project delays, and there is no evidence showing that the project delay is not dependent on the size of the organization and organizational ownership [12]. Also, Fallahnejad (2013) examined the causes of delay in gas pipeline projects of Iran. In this regard, 24 gas pipeline exploration projects were studied. Then, the extracted delay factors were evaluated by ten experts from different fields. As a result, a list of 43 factors was investigated, which was then ranked using a questionnaire [13]. Aswathi and Thomas (2013) studied the causes and impacts of delays in a large railway project between the two cities of Chengannur and Mavelikara in India. For the analysis of the factors causing delays, given their value and importance, a weight and index has been assigned to each of them. Then, using Monte Carlo simulation method and field studies, designing a questionnaire, interviews and surveying civil engineering experts and students, the author managed to identify the main causes [14]. Also, Yang and Wei (2010) focused on the delay factors in planning and design phases. Their findings showed that the most important reasons for delays in planning and designing phases were the changes made in customer demands [15]. Tumi and Omran (2009) identified the causes of delays in the construction industry in Libya. They identified six major reasons for delays [16]. Abd El-Razek et al (2008) investigated the causes of delays in construction projects carried out in the construction industry of Egypt [17]. Sambasivan and Soon (2007) investigated the causes and effects of delays in Malaysian construction industry. The authors identified the ten factors affecting the delays in Malaysian construction industry, which can be integrated into two major effects, i.e. “cost overruns and involvement” [18]. Assaf and Al-Hejji (2006) studied the causes of delays in large projects in Saudi Arabia from the employer’s, contractor’s and consultant’s viewpoints [19]. Lo et al. (2006) reviewed construction delays in Hong Kong civil engineering projects. Firstly, this study was aimed to collect the views of the stakeholders involved in construction on the delay importance. Secondly, it was to check whether the suggestions contained in the report of the Construction Industry Review Committee had any effect or not [20]. Odeh and Battaineh investigated the most important reasons for delays in construction projects with traditional contracts from the viewpoints of construction contractors and consultants [21]. Al-Momani described the root cause of the disputes between the owner and the contractor as “a poor preliminary assessment of the duration of the project.” He studied the cause of delays in 130 public projects in Jordan. He compared the planned schedule of the projects versus their real durations and found a linear relationship between them. Finally, he recommended that some adjustments should be made to the initial assessment of project costs and schedule [22].

Based on the information obtained from previous researchers and studying their viewpoints on the causes of delays in projects, after a preliminary summation, 100 factors were identified as the causes of delays in construction projects, summarized briefly as in Table 1. The clear point in the studies was the lack of sufficient information on the causes and effects of delay in the construction projects of the Iranian oil and gas industry, considering that there is an increased competition in the field of the production of oil, gas and petroleum products among Middle Eastern countries.

Materials and Methods

Introduction to the case study (National Iranian Oil Company (NIOC))

National Iranian Oil Company is the Iran's state-owned oil and gas company, and through its subsidiaries, it is also active in the field of exploration and production of crude oil, natural gas and gas condensate, as well as drilling and development of hydrocarbon reservoirs. National Iranian Oil Company was founded in 1948 after nationalization of Iran's oil and replaced the Anglo-Persian Oil Company. With more than 41,000 employees, the company is one of the largest oil companies in the world. The National Iranian Oil Company has a crude oil production capacity of 4 million barrels per day. The company produces 750 million cubic meters of natural gas every day. The amount of gas condensate production is about 900,000 barrels a day. The volume of hydrocarbon reserves managed by the company is estimated to be 157 billion barrels. In terms of oil and gas production, after Aramco company (Saudi Arabia) and Gazprom (Russia), the National Iranian Oil Company is ranked third [23].

Given the data, and the huge volume of investment required, and the fact that Iran's economy is highly dependent on oil revenues, the use of new ways to improve project management for preventing the loss of investments and opportunities in the field of infrastructural projects in the oil industry seems necessary more than ever. In such projects, the executives of which deal with a variety of issues, including delays in projects, the use of up-todate management structures and techniques is not only necessary, but also inevitable to get rid of inefficient traditional methods and to take advantage of the latest scientific achievements in this field so that the executive projects are completed within the time and cost limits with optimum quality.

Choosing the causes of delay in this research

The causes of delay are generally identified in most construction projects, and using a questionnaire, the priority and the extent of the effect of these causes on delay are measured. In this study, first, we compile the results of recent research in Iran and other countries on the causes and frequency of delays in construction projects. Then, by comparing the importance and frequency of delay factors in previous research, and also, by taking into account the environmental conditions governing construction in the field of oil and gas in Iran and the views of experts in this field, the factors affecting the causes of delay were classified into four general categories. Then, the factors with more impact were identified, and selected to form a questionnaire. The summarized result for the factors and the causes of their delay are presented in Table 2.

Analytical hierarchy process (AHP)

AHP stands for Analytical Hierarchy Process. The AHP technique was introduced by Thomas L. Saaty in 1983. The analytical hierarchy process technique is aimed to select the best alternative by pairwise comparison based on different criteria. This technique is also used for weighting the criteria, because the increased number of studied elements makes pairwise comparison difficult [24].

Criterion: It is something based on which you select. In this research, the two criteria of time and cost are used to prioritize the causes of project delays.

Alternative: it is something of which one can select. In this research, 12 selected causes are used for AHP.

Applications of the AHP method: The analytical hierarchy process method has been applied as a widely used method in the field of personal and group (organizational) decision making to solve unstructured issues in various fields. Issues such as management, politics, economics, social sciences, medicine, engineering, genetics, geography, and in summary wherever scientific decision-making is required [24].

The AHP method is flexible, and we can say that it does two things for us:

1. Finding the relative importance of criteria (criteria weights) and ranking them from the most important to the least important

2. Ranking the alternatives and choosing their best aimed at decisionmaking

Validation in AHP: For the purpose of validation or verification in AHP questionnaires, the concept of inconsistency ratio is used.

Acceptable inconsistency ratio: The inconsistency ratio is an index the value of which indicates the potential contradictions and inconsistencies in pairwise comparisons matrix. According to Saaty*, the founder of the AHP method, if the inconsistency ratio is less than 0.1, the consistency of the comparisons matrix is approved and acceptable, but if the inconsistency rate is greater than 0.1, it represents an inconsistency in the assessments and judgments of the experts [24].

How to calculate the inconsistency ratio in the AHP method: Calculation of the inconsistency ratio through manual calculations would be very difficult and complicated. The inconsistency ratio is calculated by Expert Choice software.

1. In the first step, the pairwise comparisons matrix of indices is multiplied by the relative weights vector obtained from it.

2. In the second step, we divide the resulting answer by the vector of relative weights of indices to obtain the consistency vector.

3. In step 3, we calculate the arithmetic mean of the elements of the same vector, which is called λ [24].

4. In step 4, we calculate the inconsistency index as follows:

5. in the fifth step, based on n (number of criteria), IRI is extracted from the following table of inconsistency index of random matrix, and the inconsistency rate (IR) is calculated from the following equation:

n: number of criteria

λmax: The largest arithmetic mean of vector elements

I.R.: Inconsistency Ratio

I.I.: Inconsistency Index

I.I.R.: Inconsistency Index of Random matrix

That the Table 3 is as follows:

Building a hierarchy: The first step in the hierarchical process is to create a graphical representation of the problem, in which the objective, criteria and alternatives are displayed. Figure 1 depicts the hierarchical tree structure formed for this research.

Quantization of decision-making states in hierarchical analysis: In hierarchical analysis, the alternatives and criteria are compared in a pairwise manner at each level, and their weight is calculated. Decisionmakers will use verbal judgments in these comparisons, so that each alternative is compared with other alternatives in a pairwise manner based on one of the scenarios in Table 4 [24].

Data Analysis

Study of statistical population

In this analysis, the weight of each criterion was determined using a questionnaire (Appendix 1). Of the 79 questionnaires distributed among executive managers, experts and contractors of oil projects with organizational positions, 64 questionnaires were returned. Based on the results presented in Table 5, consultants showed the most cooperation, while employers showed the least cooperation. In addition, the majority of the statistical population had a master's degree and a work experience of over 13 years.

Data analysis by manual calculations

Determining the weight of each of the causes of the delay: First, the raw data obtained from the pairwise comparisons of the questionnaires are averaged by Excel software. Then, they were rounded up to the nearest integer so that they can be used in Expert choice software. In matrix Tables 6 and 7, pairwise comparisons are displayed based on cost and time criteria, respectively. As can be seen, in the pairwise comparisons matrix, the numbers on the lower part of the inverse matrix are the same as the numbers in the upper part of the matrix.

Calculating the normal weights of matrices: The weights obtained from the questionnaire are not normal. Saaty introduced the use of geometric mean as the best method for combining paired comparisons [25]. Therefore, the geometric mean was determined for the data in each row. The normal weight means that the total weight of each column should be equal to 1. Therefore, the geometric mean obtained in each row is divided by the sum of the elements of the geometric mean column. The new column, which contains the normalized weight of each alternative, is called the eigenvalue vector or the eigenvector. In Tables 8 and 9, the normalized matrices are presented based on cost and time criteria, respectively. The final weight of each matrix is the same as the eigenvector column. Table 10 summarizes the eigenvectors results.

Pairwise comparison of the time and cost criteria: Just the same as alternatives, pairwise comparison is carried out for the criteria to determine the relative weights of each. In order to provide more correct solutions, at this stage, the comparison is examined from different perspectives. In other words, in each option considered, the superiority of a criterion over other criteria is tangible, in order to provide a basis for decision making according to the requirements and factors involved (Tables 11 and 12).

Finally, the eigenvector matrix of the criteria is multiplied by the eigenvector of the alternatives vector, so that the final percentage of the priority of each alternative is determined according to the presented criteria (time and cost). Table 13 shows the weight and final percentage of each cause of delay. In the following, the final results of the analysis are presented as a pie graph in Figure 2.

Software analysis of the research

Introducing the expert choice software: Expert Choice software is a unique method to use pairwise comparisons and extract the priorities, which can reflect your ideas with more accuracy than other methods and yield more accurate results. The software combines and integrates the priorities obtained in each part of your decision-making process, so that the final priorities of your alternatives are determined [24].

Expert choice software results: At first, the analytical hierarchy structure was introduced to the software, which included the analysis objective, the comparison criteria, as well as the alternatives that are the main causes of project delays, respectively. Then, the initial raw data obtained from the questionnaires, including Tables 6, 7 and 11, were given to the software, and the results of the software analysis are as follows.

Figure 3, or dynamic sensitivity for each alternative, shows the final weights for the alternatives and criteria in percentages in separate bar graphs. Among the criteria, time with 75% is the most important. Also among the alternatives, imposed sanctions and the impossibility of importing essential (technical) goods with 17.3% has gained the highest weight. In Figure 4, the performance sensitivity and variations for each alternative are depicted on a linear graph, and the results can be verified and compared.

Figure 5 shows the pairwise comparison graph of the two top alternatives, i.e. “Existence of sanctions and the impossibility of importing the essential (technical) goods” and "Governmental policy-making problems in prioritizing the construction projects” based on the criteria.

Figure 6 shows the pairwise comparison graph of the superior alternative and the third priority, “Existence of sanctions and the impossibility of importing the essential (technical) goods” and “social impacts (public acceptance) and disputes (state-owned and military facilities) and environmentally degrading impacts” based on criteria.

Figure 7 compares the weighted value of the depicted criteria (software output) and the inconsistency ratio of 0.07, which is less than 0.1 and therefore, it is acceptable.

Figure 8 shows the final results and the weight of the alternatives to determine the priorities on a bar graph. The inconsistency ratio is also 0.09, which indicates that the responses of the questionnaires were reasonable, and the analysis results are acceptable, as well.

Conclusion

In national projects, the limited resources and the various issues occurred at the implementation often result in longer schedules and significant cost increases in operationalization of the projects. According to a report by the National Planning and Budget Organization, the average time spent for launching national and capital projects is 8 years, and at both the national and provincial levels, these projects are faced with more than 50% delay during their progress on average [26]. Today, time has a significant impact on productivity, and management based on schedule is the key to progress. Thus, time-based competition, and taking the advantages of the opportunities are the key to success. Therefore, in this research, the causes of delays in National Iranian Oil Company projects were examined, and the obtained data were analyzed by the Expert Choice software. The obtained results were compared with manual controls in Figure 9 that the closeness of the results indicates the accuracy of software calculations.

According to the conducted analysis, the most important factor in increasing the time and costs with the most frequency is the alternative of “Existence of sanctions and the impossibility of importing essential (technical) goods” with a weighting rate of 17.30%. The weighting rates of criteria for this option in comparison with other alternatives are:

Expenses at a weighted rate of 17.86%,

Time at a weighted rate of 16.68%,

And the second alternative is “Governmental policy-making problems in prioritizing the construction projects.” The weighting rate of this parameter is 13.00%. The sub-parameters that affect this alternative are:

The costs at a weighted rate of 4.50%,

Time at a weighted rate of 15.46%,

Other alternatives in order of importance include the following:

The third alternative: “Social impacts (public acceptance) and disputes (governmental and military facilities) and environmentally degrading impacts”, at a weighted rate of 9.60%,

The fourth alternative: “Financial insolvency of the contractor” at a weighted rate of 8.90%,

The fifth alternative: “Lack of proper coordination between the counselor and the employer (excessive contact with the contractor)” at a weighted rate of 8.30%,

The sixth alternative: “Lack of financial resources of the employer” at a weighted rate of 8.30%,

The seventh alternative: “Problems in research and design” at a weighted rate of 7.30%,

The eighth alternative: “Lack of skilled manpower by the contractor” at a weighted rate of 6.60%,

The ninth alternative: “Problems in workshop supervision” at a weighted rate of 6.30%,

The tenth alternative: “Contractor’s technical (operational facilities) and equipment difficulties” at a weighted rate of 5.60%,

The 11th alternative: “Type of contract and contractual issues” at a weighted rate of 5.10%,

The 12th alternative: “Managerial and technical inability of the employer” at a weighted rate of 3.70%,

In this case, it is important to note that it is impossible to prescribe a definitive version for all projects (with different specifications), but the specific conditions of each project must be examined, and the specific causes of the same project must be determined.

Suggestions

Since we have been dealing with a variety of topics on the causes of increased project delays, and each of these issues requires a separate research setting, the suggested topics for further study and research are presented as follows:

1. Analysis of the same topic by other multi-criteria decision-making techniques such as the network analysis process method or structured method of the preferred ranking for enrichment of evaluation as well as comparison of the results obtained by these methods.

2. Further studies to develop various regulations and guidelines, taking into account the specific characteristics of industrial construction projects.

3. Further study on the methods of selecting the contractor company for the project and its consequences.

4. Study on the causes of increased time and costs and providing a model for various types of project contracts according to its capacities and limitations.

5. Study of the individual factors increasing the delay and costs through modeling software and analysis of capacities, and its advantages and disadvantages.

Data Availability Statement

Some or all data, models, or code generated or used during the study are available from the corresponding author by request.

Acknowledgements

The authors would thank NIOC professionals for their participation in the survey and providing the raw data for this study. We also would like to thank Milad Saidian, Amin Saidian and Reza Ghashghaei for their help and feedback during the preparation of the manuscript.

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