Deepwater Horizon Disaster and Strategic Asset Management

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Strategic Asset Management
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Table of Contents
Introduction......................................................................................................................................3
Focus on strategic asset management in an engineering context....................................................4
Demonstrate your critical analysis of a particular case study..........................................................6
Demonstrate your ability to design and articulate an appropriate strategic asset management plan
covering the entire asset life cycle.................................................................................................11
Discussion......................................................................................................................................13
Conclusion.....................................................................................................................................17
References......................................................................................................................................18
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Introduction
In this report, it describes the strategic asset management concept. Asset management is a
strategic method defines how an organization plans its business, reach own decisions as well as
process, uses and communicate the information. In this report, it will discuss asset management,
its strategies, capabilities delivery systems and decisions theory. It will also discuss the critical
analysis with the help of the deepwater horizon disaster 2010. This disaster begins in the 20
April 2010 in the Gulf Mexico on BP-operated Macondo. In this disaster, 11 people were killed
and 17 people were injured. In the asset management, the critical factor is deepwater horizon
disaster; which is a biggest marine oil spill recorded in the petroleum industry and evaluate to
8% to 31% large in the volume. In this report, it explains the strategic asset management which
provides the knowledge of major asset failures, origins, critical analysis, its effects, and causes.
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Focus on strategic asset management in an engineering context
Strategic asset management structure provides the facility to make policies as well as directions
to manage and upgrade the investment planning and management over the state public sector.
Asset management and its strategies
Asset management is focused on operation management, operation structure and organizational
strategies. These features will affect the environment of an organization, and it is used for facing
technical, natural, organizational, economic and other uncertainties which influence the business
practices. In the traditional method, asset management is based on decision-making skills and
mining the complexity, but as per the engineering context, the business includes tools, strategies,
approach and techniques. Engineering factors develop the precaution and safety step before
taking the implementation step. It is the most appropriate step used by the businesses that due to
these activities it minimizes the cost, risk and complexity. Engineers used various design
methods, execution method, which is based on realistic theory (El-Akruti,, 2018).
Their primary focus is to implement their knowledge and identify the resultant. The structure of
asset management gains activities and remuneration. The British Petroleum engineers performed
well in their specific job role. Employees, crew members give their best respond to the
organization. Department segregates the work. It reduces waste and another resource. Optimize
the support is the most skilled talent which must be used by every employee. Technical,
mechanical, information and technology, civil and other streams manage their work according to
their streams. It helps to reduce the workloads that are not aware of the job. It helps to maintain
the work structure in the business, organization and industries.
Asset management is the well-structured approach which controls the investments in the
organizations on support to the others. This structure includes develop, control, operate, manage,
upgrade and arrange of assets with appropriate cost efficiency. Cost efficiency includes all types
of risks as well as performance aspects. Assets are those which are earned by the person own self
or a particular company which is valuable. In the financial context assets are tangible as well as
intangible assets which are earned by the company (Mena Report, 2018). These factors make
profits, economic values and benefits to the organizations. Assets management strategies are
those which are important for the implementation of an asset managing structure. It includes
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plans, practices, activities, process whereas managers of the organizations follow to achieve
success and gain better outcomes.
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Demonstrate your critical analysis of a particular case study
Deepwater Horizon Disaster of 2010
In this case study, it is discussed that the deepwater horizon oil spill disaster is the biggest
petroleum industry disaster and it is predicted 8% to 31% larger in the Gulf of Mexico. The
government of the United States predict total charge at 4.9 million barrels. Mike Williams who
was the chief electronics technician, emergency announced to reduce the risk; over the rigged
system. The company works on Macondo and $560 million deepwater horizon rig in the Gulf of
Mexico. Manage the electronics towards the deepwater horizon to urgency alarms. The gas level
is increased and show the high alert and it directly converted into spark. Before the alarms are
ringing there are a large number of workers done their workers within the marine working
station. After the disaster there are 126 members of the company jumping into the ocean, 17
members were in danger and some members were injured includes mike and approximate 11
members of the deepwater horizon board were killed. The rig was damaged and burned for 3
days, and 700,000 gallons of oil is combust. This deepwater disaster was noted and highlighted
in the biggest disaster of a marine oil spill which is occurred in the United States Company like
British Petroleum. The company was founded in 1909 and famous for its services. BP is a
famous and popular Anglo-Persian oil organization. Company performance was falling in down
due to issues and failure strategies and loss its $811 million. Its organizational strategies also
affected due to bankrupt, bank issues, cost structure, and it directly affects to its performance
(Basak, 2014).
Deepwater horizon rigs
The disaster is coming due to many issues which are related to the maintenance, managing
structure, system coordination’s as well as board. In 2009, the organization makes plans for
safety audit towards the rig. This safety audit used in the other British Petroleum drill site at the
same time as the planning. The audit of the organization identify that it is essential to notice that
there are some requirements is important to repairs and do appropriate actions towards it. It
requires 3500 hours to fix the issues and reduce the risk of future uncertainty (El-Akruti, 2013).
Case study discussion
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The deepwater horizon falls into the ocean on 22 April, and it damages the top pipe and all the
parts of the system which support to prevent and protect the blowouts by occur. Before the
disaster is happening there were five million barrels which is full of oil and spill into the Gulf of
Mexico. It is recorded that Exxon Valdez made the record for the highest spill in United States
waters. It is shocking news for all analysts how this disaster is happening, what are the causes,
which irresponsibility’s occurred so this accident is happening. All these problems were
occurring due to operational problems as well as management problems towards the rig. Health
and safety issues were faced by the company (Snider, 2016).
Causes and effects
Deepwater Disaster 2010 consequences directly affect the environment. When a disaster happens
it affects the spill waters; polycyclic aromatic hydrocarbons ratio is increased and it directly
affects the sea fishes, birds, turtles and marine mammals. PAH’s increase the risk of health issues
and create risks for human as well as marine life. This disaster affects to the company employees
as well as environmental impacts. The major impacts were marine species. It is found that there
are 400 species are affected due to this disaster. These species are lived in Gulf Island and Marsh
Island. There are 34,000 birds are also in danger.
Impacts on the marine: It is found that the increase of chemicals and dispersants. It causes
shrimps born without eyes; shell-less crabs, clawless crabs and without spikes. All these
unnatural effects are coming due to this disaster. Methane gas affects the marine life cycle and
due to this it creates the dead fishes, mammals and minimizes the oxygen.
There are also some disaster effects which affect the company employees which are mentioned
below:
It minimizes the employee's interest; it affects the cost, safety and security of the company
members. Employee’s performance was affected and it reduces the practices within the
organization. Employees compensation is affected, performance ratio, working management
style as well as company reputation is decreasing due to the negative impacts of the disaster.
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Impacts towards the beach: Oil disaster affects the large area of miles of united states which
around the Gulf of Mexico. It affects the food chain, the death ratio of the marsh vegetation is
also increase.
NPT and crisis model
In the BP it is investigated that by several reports and arguments which is a misinterpretation of
critical test named Negative pressure test. This test is the major cause of the disaster. Crisis
management model helps to the organizations to maintain crisis, managing the risks and reduce
the negative effects. Failure in crisis damage to the whole system and spoil the management. It
directly affects to the company stakeholders, cost as well as face many issues. BP uses the
decision making strategy towards its management. In the new strategy; the decision making
authorities and duties for meeting the activities, performance tasks of employees at various levels
of the organization. These meetings were conducted by the asset managers of the organization.
Asset managers deal with BP to meet the actual performance targets and also analysis the
employees working style (Hodkiewicz, 2015).
Employee’s rewards and incentives are based on their performance and working style.
Some advice to the organization to reduce the risk of failure: the three face model helps to the
company and manages the future crisis. This model supports to the company to maintain its
management and minimize the effects; in this model, is divided into three parts. This process
should be integrated and effective. In its first phase named pre-crisis; the purpose of this phase is
to prevent and prepare. The second phase named crisis response; it is arising when the crisis is
occurring. The last phase named post-crisis which purpose is to recover and identify the
strengths and weakness. It also identifies the crisis was handled and give direction to the
organization.
Pre-crisis stage: This stage helps to the crisis manager to know the actual reasons for the crisis,
what is done in the past, what are the effects of these crises. The purpose of this stage is to
prevent the crisis. To reduce the risk of the crisis it is important for the organization to identify
the risk such as implement the risk audits, measure the safety, control the system and analysis the
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scoreboards. Preparation factor helps to the organization to make plans for crisis management. It
will support to protect the management by future risk.
Response stage: This stage is coming after the crisis is occurring. It also involves management
to give response towards crisis. It is the most critical stage for the managers; in that case, it is
essential for the manager to follow this stage to overcome the crisis. During this stage, it
provides the guidelines to manage the work reduce the crisis and support for all those employees
as well as members who are connected with it and affected. So it is suggested that the
organization should take appropriate action by the help of effective planning. It influences public
opinions and handles the situations. The main actions for the managers to protect the
stakeholders of the company; because there safety and security are important. Public relations are
also helpful for the company managers because they develop the information which is sent to
various publics. Crisis managers should be active and give a quick response after the crisis.
Peoples are curious to know the actual information towards what is happing, which is affected.
Post-crisis stage: In this stage, it occurs when the response stage is finished. When an
organization is return in the position and identifies the better planning for future crisis. It is
important for the company managers to make pre-planning for the upcoming crisis because it
will support to overcome the risks and minimize the effects of the risk. Reputation and dignity
are hard to build and it is also very challenging for the company to maintain it. In that case, it is
suggested that the organization should deliver all the relevant information to the stakeholders
who are promised. It is also essential for the organization to update the progress of recovery
efforts, keep the stakeholder's updates. Measure the corrections and do proper investigations. The
organization should analysis the crisis management towards the observations, lessons learned
and these lessons connect to the organization crisis management structure (Zhang, 2015).
The other suggestions for the organization are: Crises are the idealistic and perfect learning. It is
challenging for organizations. It provides real and appropriate opportunities to change the
organization. After following all these stages it is important for the company which is; to
evaluate what is done on a prior basis. The last stage provides opportunities to prepare and
prevent future crisis. BP should prevent its risks and reduces the risk of crisis. It is investigated
that BP is not prepared for the oil disaster so it is essential for the company to make plans for
future crisis. To maintain its reputations and dignity it is important for BP to invest its cost for
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social networking ads and advertising. The company must purchase of search terms to interact
with the internet users and identify all the queries towards gulf oil spill to BP site.
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Demonstrate your ability to design and articulate an appropriate strategic asset
management plan covering the entire asset life cycle.
Design a strategic asset management plan covering the entire asset life cycle:
In designing the strategic management plan it includes two pillars which are asset management
plans and asset management system plans. All these include in organizational planning.
Figure 1Strategic Management Plan
In this structure, it helps to the company to identify the organizational objectives which are
converted into asset management purposes, the concept of asset management plans, positions of
asset management system helps to achieve success towards the asset management objectives. In
this design of strategic asset management, it helps to the organization managers to make
effective and appropriate plans by using its positive outcomes. In the given chart it describes that
organizational policy and plans help to reduce the risk of failures (Koç, 2018).
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In the organizational objectives, it is essential for the organization to identify the demand ideas,
information’s which is collected by the stakeholder wants and needs. It is also important for the
managers to know the performance as well as the abilities of the employees. It is necessary for
making the asset management plans to include asset portfolio and asset management system.
This strategic management plans support to the organization not only internally but also
externally. It identifies the risk. Prevent the failure, give a response to the failure, and maintain
the cost driven. It also supports to managing the risk, manages the failure, understands the failure
cause, and support to cost control.
Company organisation plan could become a saviour to the company and it will play the most
important role for the company when it comes to prevent the company from any of the upcoming
or ongoing crisis. The company BP which is one of the biggest companies in their respective
industry, failed to manage its crisis, risk management and safety standards as well. This
irresponsible attitude of the company ended up in the one of the largest disasters of the history of
its own kind. Company strategic plan would be very helpful in order to prevent from the
unexpected issues which could create problems for the company (Koç,2018).
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