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What’s the field?

Complexity (in Large Scale Infrastructure Projects) Donald Lessard MIT Sloan School of Management Infrastructure meets Business PDW 2009 AoM Meetings Chicago, August 2009 dlessard@mit.edu. What’s the field?. Project management Infrastructure

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What’s the field?

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  1. Complexity (in Large Scale Infrastructure Projects) Donald LessardMIT Sloan School of ManagementInfrastructure meets Business PDW2009 AoM MeetingsChicago, August 2009dlessard@mit.edu

  2. What’s the field? • Project management • Infrastructure • Design and management of complex organizations (that deeply interact with institutional context)

  3. Complexity as fundamental element • Critical to understanding, designing, and managing in these domains • These domains provide rich environments to ground, push development of fundamentals

  4. Risks associated with project outcomes Geopolitical risks Market Risks • War • Trade disruption • Energy security • Carbon regime Institutional Risks • Prices • Exchange rates • Interest rates • Carbon price Industry/Competitive • Political • Financial • Regulatory • Legal • Demand • Supply • Competition • Infrastructure Natural Risks • Geology • Weather Project Risks • Technology • Partners • Contractors • Execution

  5. Sources of major failures in projects

  6. Project characteristics giving rise to complexity Complexity is an emergent property of system, but can/must model bottom up • # of components, interfaces (moderated by similarity) • Difficulty/novelty of individual components • Coupling of components • Dynamism of components

  7. TICA Domains of complexity – Oil and Gas • Institutional • # stakeholders • Track record, difficulty • Alignment • Uncertainty re position, relationship • Technical • # subsystems • Distance from frontier • Coupling • Uncertainty • Commercial • # markets involved • Market structure • Market volatility • Market access • Architectural • Task sequence, overlap • Modularity • Pace • Flexibility Technical, Institutional, and Commercial are inherent in the project. Architectural depends on operator experience and choices

  8. Performance code 2 3 4 5 6 4 6 8 10 12 14 16 18 20 Performance vs. Compound Complexity Gorgon Gorgon Kashagan Kashagan Thunderhorse Thunderhorse Pearl Pearl Sakhalin II Sakhalin II 6 6 South Pars South Pars Agbami Agbami Oil sand projects Oil sand projects Tengiz Tengiz Snohvit Snohvit Asgard Asgard Performance Bonga Bonga 5 5 Ormen Ormen Lange Lange Karachaganak Karachaganak Shah Shah Deniz Deniz Kristin Kristin Tangguh Tangguh 4 4 Caratinga Caratinga - - Baracuda Baracuda Preliminary results Moho Moho Bilondo Bilondo Plutonio Plutonio Erha Erha Mexilhao Mexilhao Sakhalin I Sakhalin I 3 3 ACG ACG Albacora Albacora Leste Leste BTC BTC CPC CPC Blue Stream Blue Stream Kizomba Kizomba Girassol Girassol Na Na kika kika In In Salah Salah Malampaya Malampaya Atlantis Atlantis 2 2 Oryx Oryx Holstein Holstein Rasgas Rasgas exp. exp. Chad project Chad project Mad Dog Mad Dog Diana Hoover Diana Hoover Marlin Marlin Burullus Burullus Scarab Scarab 1 1 4 4 6 6 8 8 10 10 12 12 14 14 16 16 18 18 20 20 Complexity (Tech X Institutional)

  9. Payoffs?

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