Operations Management Shell Oil Group Case

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Running head: SHELL OIL GROUP CASE 1

Operations Management Shell Oil Group Case

Prepared for Dr. Jie Yang

Prepared by:

Mario Aguilar

Corrie Bass

Qurat Khan

Randy Munguia

Aaron Portis

November 2, 2014

SHELL OIL GROUP CASE 2

INTRODUCTION

Manufacturing companies can have a multitude of equipment operations in order to

complete a product. For instance, “Oil shale can be mined and processed to generate oil similar

to oil pumped from conventional oil wells; however, extracting oil from oil shale is more

complex than conventional oil recovery and currently is more expensive” (About Oil Shale,

n.d.). The complexity of maintaining 24/7 ongoing operations involves key project management

pieces. In the case of Shale Oil Company’s in Aston, Ohio which has units that operate 24 hours

a day, 7 days a week, maintenance on a predetermined schedule involves program evaluation and

review technique as a method to reduce shutdown time and improve operating efficiencies. By

using the PERT method Shale Oil Company is able to plan, control, and establish phases on each

three year scheduled maintenance and is able to reduce nationwide shortages. Also by

incorporating the PERT method Shale Oil Company is able to answers several questions such as:

determining the expected shutdown time and the probability of how long the shutdown will be.

The probabilities of how many days Shale Oil Company will finish the maintenance project.

Also, if Shale Oil Company considers adjusting the shutdown budget to shorten maintenance

time the company will have ideas of how to proceed. On the Shale Oil Company website under

Who We Are the company states, “The AMSO team is excited about the potential for shale oil to

reduce America’s dependence on foreign oil” (n.d.) These three questions are important

questions Shale Oil Company should take into consideration in order to contribute to the

reduction of America’s dependence on foreign oil. The three questions will be examined and

discussed further throughout the case study. Throughout the case study the three phases of

project management will be discussed, PERT/network diagram will be illustrated with all the

numbers of a project schedule, and a Time illustrating activity time. The overall case study will

SHELL OIL GROUP CASE 3

detail a strategized schedule to improve effectiveness and efficiencies during the scheduled

maintenance.

Project Management

With Shale Oil facing this maintenance issue every 3 years, it brings up the very

importance of project management. Projects such as these have a designated beginning and end

which is determined in the scheduling phase which we will describe below. Unnecessary delays

and cost hindrances have to be taken into account and figured into the project shutdown time

which needs to be kept at a minimum in order to continue service. It is very common for a

project to fall behind schedule or over budget. The complexity of the project itself brings up the

stress and importance of quality project management. The fundamental challenge of project

management is to accomplish all of the project goals and objectives while recognizing the

preconceived constraints such as time, quality and budget. To oversee a project, it is important to

follow certain steps. There are three phases involved in project management. These are:

Planning (goal setting, defining the project, team organization), Scheduling (deciding when the

various activities will be carried out) and Controlling (closely monitoring resources, analyzing

data, investigate any delays, determine solutions, compare the costs of the delays and work out

solutions).

There are three useful approaches that a project manager may use to help in these phases

and these are CPM (Critical Path Method), Gantt Charts, and PERT (Program evaluation and

review technique). Shale uses PERT as a planning and controlling tool to reduce shutdown time.

PERT follows six basic steps:

1. Define the project and prepare the work breakdown structure.

SHELL OIL GROUP CASE 4

2. Develop the relationships among the activities. Decide which activities must precede

and which must follow others.

3. Draw the network connecting all the activities.

4. Assign time and/or cost estimates to each activity.

5. Compute the critical path.

6. Use the network to help plan, schedule, monitor, and control the project.

PERT analysis can easily find the probability of finishing by a certain date. The PERT

diagram makes use of three time estimates for each activity. These are utilized to estimate the

anticipated values and standard deviations for the activity. Graphically, the PERT diagram is

expressed by nodes connected with solid lines. There are two ways of drawing a network