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In spite of the environmental concerns regarding oil and gas industry, Herkenhoff (2018) suggests that the oil and gas industry will remain the most dominant source of energy for decades to come, even as various alternatives emerge It is estimated that hydrocarbons will still be responsible for nearly 80% of total energy sources in 2035 (Elhoush, 2017). Oil and gas operations are typically divided into three distinct activities – upstream, midstream and downstream Herkenhoff (2018). The upstream sector is mainly related to exploration, conceptual development, planning and production phases. Midstream activities involve building storage facilities and the distribution of hydrocarbon. The downstream sector consists of all refining and processing of hydrocarbons produced including crude oil. Offshore upstream projects are considered as megaprojects (Merrow, 2012). A megaproject is defined as having a budget exceeding US$1 billion excluding development costs incurred prior to project approval (Rui et al., 2017). Offshore projects are characterized by a significant number of interfaces, interdependencies, complexities, and risks, some of which are strategic and must be managed at a level above the project team (Jergeas, 2008). In addition, most oil fields are owned by multiple licensees and require vast number of suppliers, contractors, subcontractors and consultants. Therefore, decision making, planning, and management processes involve multiple stakeholders with conflicting interests (Aaltonen & Kujala, 2016).
Many offshore development projects on the Norwegian continental shelf have experienced delays and large cost overruns in recent years. In 2013, the Norwegian Petroleum Directorate issued a report containing an assessment of the status of oil and gas projects in Norway (Alveberg & Melberg, 2013). The authors of the report suggest that from looking at all projects, the cost increase in relation to plans for development and operation was more than NOK 49 billion. This indicates that in recent years Norway’s offshore projects have generally become more expensive than the unbiased estimate submitted in the plans for development and operation. (Alveberg & Melberg, 2013). attributed the cost increase first and foremost to poor front-end planning as well as to poor follow up by the operator company. In a global based study Merrow (2012) has shown that in the last decade only 22% of offshore projects could be called successful. Merrow (2012) attributed the poor results to three major factors that together explain the poorer outcomes of offshore megaprojects. The three factors are: 1) poor front-end planning, 2) high turnover of leadership positions especially the project director position, and 3) the strong tendency to establish aggressive schedules. This aggressive schedule aggravates and emphasizes the effects of poor front end-loading and high turnover of the leadership positions.