Journal Article

Structural modelling of internal risk factors for oil and gas construction projects

A. Kassem, Mukhtar, Khoiry, Muhamad Azry, Hamzah, Noraini

2020

Overview

Purpose Project failure is the result of one or a combination of several causes of risk factors that are very important to identify for effective performance. This study aims to focus on studying the fundamental relationship between internal risk factors and the negative effect on oil and gas project success in Yemen using the partial least square structural equation modelling (PLS-SEM) method. Design/methodology/approach Data collection was carried out using a formal questionnaire survey of the oil field sector in Yemen by companies involved in mega-oil and gas construction projects. A hierarchical model for determining causative internal risk factors and their effects was developed and evaluated using SEM method by SmartPLS3 software technology. Findings The findings of analyzing model indicate that all categories have a significant effect on project success, while the most significant affected categories in the internal risk factors are project management factors, feasibility study-design and resources-material supply with a path coefficient value of 0.213, 0.197 and 0.186, respectively. Moreover, for the hypotheses test, the positive relationship means that all experimental hypotheses are accepted according to path coefficient value analysis. In addition, the internal risk factors research model shows the ranking of effects on project success starting with project stoppage (loading factor 0.841), cost overruns (loading factor 0.818), time overruns (loading factor 0.726) and project target failure with loading factor 0.539. Research limitations/implications The research was limited to the oil and gas construction projects in Yemen. Practical implications Interpreting the relationship between internal risk factors and their impact on the success of construction projects in the oil and gas sector will assist project team and oil companies in developing risk response strategies and developing appropriate plans to mitigate the effects of risks, which is presented in this paper. Originality/value The paper explains the relationship between cause and effect of internal risk factors in oil and gas projects in Yemen, and is expected to be a guideline for the oil companies and future academic research in the risk management area.

• Publisher: Emerald Publishing Limited,Emerald Group Publishing Limited
• Subject: Construction industry / Contractors / Costs / Data collection / Design factors / Developing countries / Feasibility studies / Gas industry / Hypotheses / LDCs / Literature reviews / Mathematical models / Modelling / Multivariate statistical analysis / Natural gas utilities / Oil and gas fields / Oil and gas industry / Oil fields / Project engineering / Project feasibility / Project management / Questionnaires / Resource management / Risk analysis / Risk factors / Risk management / Stakeholders / Structural equation modeling / Success / Value analysis