The complex nature of integrating various systems into floating production storage and offloading (FPSO) exposes projects to various risks. This research will dig deep into these risks and the management practices employed by Yinson Production, whose headquarters are in Kuala Lumpur, Malaysia. The need to mitigate research and development (R&D), new product development, change management, and technology integration within the FPSO sector shall be addressed. A comprehensive theoretical framework will be done to identify gaps, and research methods to fill the gaps shall be proposed.
Keywords: FPSO, new product development, R&D, Yinson production
Aims, Research Questions, and Background
Background of the Study
In the past few decades, the offshore oil and gas industry has gained significant prominence, with FPSOs emerging as practical solutions for remote deep-sea and deep-water oil exploration and excavation. Yinson production has grown to become one of the top three organizations in the world, with a market capitalization of over USD 1.8 billion and a presence in over 18 countries (Google Finance, 2024). Despite the prosperity of both the company and the FPSO industry, this market still faces significant risks regarding risk management in system integration processes. Recent FPSO risks include increasing operational complexities, environmental regulations, cyber-attacks, and cost pressures. These will be explored alongside past and future risks to ensure appropriate mitigation strategies can be formulated.
Study Aims
This research project will investigate and access the current risk management framework used by Yinson Production for its FPSO operations and other roles. By leveraging previous literature, this objective will make the study uncover the existing strategies, processes, and tools currently employed by the company to mitigate the risks. One of the most popular tools, a SWOT analysis, will be based on research, and literature will be used to show the company’s strengths, weaknesses, opportunities, and threats (Wu et al., 2024). The study will use previous research to demystify various risks related to R&D, new product development, change management, technology transfer, and system integrations in the FPSO industry. The study will critically review the feasibility of the company’s mitigation strategies and those proposed by existing literature.
The research will not focus on identifying good-performing areas and areas where Yinson Production is lagging behind. Specific focus will be made on seeing if the strategies the company employs cushion it for current and future risks. If risks are identified, then literature and research will be used to gauge if viable mitigation measures and solutions to the problems are available. Through this process, the researchers will be able to formulate specific, measurable, achievable, realistic, and time-bound recommendations for the organization. Moreover, the solutions discovered in this research as the researchers help will help fill the many gaps researchers have identified in mitigating risks in FPSO operations (Bhardwaj et al., 2022). The insights that the study will uncover will be theoretically capable of being used by scholars and practically by decision-makers.
Research Questions
Three main research questions shall guide this study and the methodologies conducted.
- What are the current and potential risks faced by Yinson production, and what is the effectiveness of the organization’s risk management framework when it comes to accessing and identifying risks in system integration?
- Compared to industrial benchmarks, what are the strengths and weaknesses of Yinson production about risk management when doing system integrations?
- Based on the identified weaknesses, what solutions can the global organization implement to optimize its operations and maintain a competitive advantage over its rivals in this area?
Literature Review
Previous studies in risk management in system integration processes in the domain of FPSO projects reveal its complex and dynamic nature and gaps that necessitate further studies. This is particularly important for Yinson production, which relies on the FPSO vessels to extract oil and resources in different regions across the globe. However, these engineering processes are usually subject to risks and uncertainties. In its simplest form, risks are the probability of something terrible happening (Chmutina et al., 2020). In engineering projects, these risks could include uncertainties that impede the outcomes of a research project, such as schedule delays, cost overruns, quality challenges, and safety problems. Yinson production is therefore exposed to various risks, which include technical, financial, environmental, operational, market, and regulatory risks.
Risk Identification and Assessment
An extensive body of literature looks into methods of identifying and accessing risks, which is a critical step in risk management. Saisandhiya’s (2020) study argues that hazard identification and risk assessment (HIRA) is a proactive tool that could help eliminate injuries, illnesses, and property damage risks. Though their study was mainly focused on the petrochemical industry, insights from the research and the proactive nature of risk identification and assessment are recommendable for organizations in the FPSO industry like Yinson production. This is backed up by a study by Xia and Xiang 2022 who show that there is a need for a comprehensive risk assessment process within organizations that should involve analysis of technical, operational, environmental, and people-related factors. Zong et al., 2024 propose a quantitative method for identifying and assessing risks of supply vessel collisions based on fault tree analysis (FTA), Bayesian network (BN), hybrid theory, and fuzzy theory. However, due to the complex and ever-changing nature of FPSO platforms, constant research should be done that incorporates new technologies such as the Internet of Things (IoT), AI, and other new technologies.
Categorizing of Risks
One of the areas that has been widely studied about system integration processes is identifying and categorizing risks in engineering projects. For instance, a vast body of research looks at the frameworks and methodologies that could be used to place risks into different segmentations. For instance, a study by Alzoubi (2022) found that risks can be classified as natural or artificial. In the context of FPSO classification, risks can be categorized based on their source, whether technical, schedule, interface management, organizational, or external risks. Technical risks are usually caused by technical complexities, such as compatibility problems in the system or bugs in the FPSO’s software (Aljarman et al., 2020). Technical risks in deep-sea exploration are usually fatal and can result in significant losses for organizations like Yinson production (Amon et al., 2022). Gaps in these risks have been identified to be caused by inadequate equipment testing before they are deployed into the market.
Yinson production and related organizations also have to grapple with scheduling risks, which refer to the unseen changes that may influence an organization. Past literature has found various factors that cause scheduling risks and the strategies that can be used to mitigate them (Sami Ur Rehman et al., 2020). Some common scheduling risks include late equipment deliveries, shortages of employees to perform offshore operations, and weather problems common in areas where Yinson Production has set up its operations (Koulinas et al., 2020). Addressing schedule risks could help with some significant problems associated with system integration processes, such as cost overruns.
Risk Mitigation Strategies
The literature on exploring and managing risks in FPSO system integration processes is extensive but inconclusive. Literature shows that effective risk mitigation strategies are essential for minimizing the likelihood and impacts of risks identified in FPSO projects (Agbadiba & Maduagwu, 2023; Bhardwaj et al., 2021). Agbadiba and Maduagwu 2023, further advocate for a proactive approach toward risk mitigation by proposing measures such as having pre-defined safety protocols, having well-set-up early warning systems, and adopting a redundancy design. However, many scholars also proposed the adoption of advanced and modern technologies such as machine learning predictive analysis, tensor and radar detection systems, and real-time monitoring as effective measures for risk mitigation in FPSO projects, i.e. (Balachandran & Padmanabhan, 2023; Cheng et al., 2023). However, old FPSO equipment has integration challenges with the new technologies, and buying new machinery is capital intensive, presenting significant challenges for organizations such as Yinson production.
Current Challenges and Risks
Despite the progress and advancements in risk management strategies proposed by literature and those used in practice, several challenges persist in system integration processes for FPSO projects. One prominent challenge is integrating complex systems in the FPSO structure, such as marine structure, processes, and safety systems, into one unit. This is mainly because all the FPSO subsystems have unique safety nets, dependencies, and interfaces. Moreover, the projects have many stakeholders, some of whom may be focused on managing risks, while others are more concerned about the operations and profitability of the organization. Therefore, more study is needed to know how the projects could achieve a holistic and proactive approach to risk management. The best practices identified should be theoretically provable and capable of being used in real-world applications by organizations such as Yinson production.
Research Plan
Overall Strategy
A triangulation mixed methods research methodology shall be adopted for an extensive exploration of risks and the methods to manage them in system integration processes for FPSO operations. This research design used qualitative and quantitative data to answer the same research questions, and then the two findings were compared and contrasted (Dawadi et al., 2021). This approach has been chosen because it facilitates a holistic exploration of all risks in the system integration processes for FPSO projects in Yinson production and the development of risk management strategies. First, preliminary research shall be conducted to identify and understand the main theoretical frameworks, methods, and best research practices that can be used to identify risks in the context of system integrations. Moreover, the preliminary phase shall also be focused on ensuring that the most relevant stakeholders in risk management in organizations and at Yinson, such as engineers, risk managers, contractors, and regulatory bodies, are identified. Other processes in the project shall include collecting qualitative data, quantitative data collection, analysis of the collected data, synthesis of the data, provision of recommendations, and reporting and disseminating the data.
Assumptions
This research plan will hold various assumptions, but their limitations are not expected to be capable of making the research void. It shall be assumed that Yinson production, the FPSO industry, and relevant regulatory frameworks will remain stable in the research period and represent recent past and future events. The research proposal also assumes that the stakeholders and participants required for the qualitative interviews and the quantitative surveys shall be willing to participate. Methods that make participants, such as incentives, informing them on time, and seeking relevant permissions, will be used to increase the participation rate. It is also assumed that the participants’ responses shall be honest, accurate, and reflective of the organization, industry, and regulatory systems. The research shall focus on Yinson production, but it will be assumed that the insights from the study will be accurate for all other organizations in the industry. The research shall also assume the existing risk management tools can assess, identify, and manage risks in the system integration process, although with room for improvement. Finally, the research will assume that various stakeholders will be willing to use insights from this study to implement changes in their processes.
Research Methods
Qualitative Methods
The collection and analysis of qualitative data shall provide the research with in-depth knowledge of system integration processes in FPSO projects. Qualitative data focuses on describing and exploring phenomena, answering questions such as why and how things happen (Alam, 2020). This study will use semi-structured interviews to answer the research questions, and risk management aims in FPSO projects. The interviews will aim to gain individual experiences, perceptions, and challenges in system integration processes in the organization. The selected participants shall include a project manager(s), engineers, contractor(s), and the regulatory bodies in different regions where Yinson production has set up its offices and FPSO centers. The procedure will follow a semi-structured interview to ensure that all relevant topics are covered.
Quantitative Methods
Quantitative data will be collected by designing and distributing surveys to diverse stakeholders involved in FPSO processes related to Yinson projects. Characteristics of quantitative data are that it is numerical, objective, structured,d and generalizable (Hays & McKibben, 2021). The goal of these surveys shall be to quantify various aspects that relate to the prevalence, perseverance,e, and severity of the identified project risks. The survey design shall be guided by the insights gained from the qualitative interviews in the earlier part of the project. This participant will be asked to state the impacts of various risks to the organization, their perceptions, practices employed, and the outcomes of the projects. The survey’s target audience will be various staff members at Yinson, such as project managers, engineers, technical staff members, employees working for regulatory bodies, and suppliers of various equipment. The surveys shall be distributed electronically using various communication means.
Data Analysis
Qualitative Analysis
The primary method for analyzing the qualitative data collected will be thematic analysis. This analytical method represents themes based on recurring topics, ideas, and shared experiences between the collected data set (Hamel et al., 2021). In this study, the interview transcripts will be read thoroughly, and codes assigned to represent particular segments related to risk assessment, identification, and management in system integration in FPSO projects. Codes identified to have similarities shall be grouped together and help represent particular research aspects. Then, theme development and interpretation shall be done. The nature of this analysis will be flexible, and experts will determine the best way to go based on the available data and the existing best practice principles.
Quantitative Analysis
The quantitative data collected from the online surveys sent to multiple respondents shall be analyzed using various statistical methods. Descriptive statistics will first focus on the organization and summarize critical aspects of data, such as its mean, median, mode, range, variance, standard deviation, and histograms (Selvan & Balasundaram, 2021). A correlation analysis will be done to see if particular variables, such as the types of risks and the risk management practices employed, are related to the success of FPSO projects. Regression analysis, which measures the relationship between two or more independent variables and a dependent variable, will be used to see how management risk practices could influence the project’s outcome. Once qualitative and quantitative data analysis has been conducted, the results will be triangulated to ensure the validity and reliability of the research.
Alignment With Aims
The research methods employed in triangulated mixed method research align to explore and manage risks in system integration processes of Yinson production FPSO and formulating solutions applicable in theory and practice. The semi-structured interviews for collecting qualitative data explored the views and perspectives of the stakeholders, thus showing the organization and industry’s current risk management practices. The perspectives are further analyzed alongside empirical data, thus providing the research with quantifiable evidence of its findings. The methodology will help identify the current risks faced by the organization and the industry. They will also offer a platform for Yinson production to benchmark itself alongside other industry standards and competitors. The data collected will have theoretical and practical impacts and will build on the existing academic literature on risk management in system integration processes in the FPSO sector.
Critical Discussion
This section delves deeper into the rationale of selecting the research methods and analytical frameworks for the research questions. The decision to use a mixed method study research design was motivated by their ability to provide a holistic understanding of various aspects of the research problem. The qualitative research methods through the semi-structured interviews provided a deep understanding of the complexities and challenges associated with risk management and offered insights into the personal experiences of the employees and the regulatory bodies that deal with Yinson. Quantitative methods, on the other hand, provide objective, numerical confirmation of these insights and provide a basis for comprehensive statistical procedures such as descriptive, correlation, and regression analysis (Hays & McKibben, 2021). Using both methods in a triangulation manner would thus provide the most benefits for the study.
While triangulation mixed methods research methodology was adopted for this study, several alternatives exist that could be used. Delphi studies, which are structured communication strategies, could be used to gather and refine the opinions of the experts and other experts in the research (Parker et al., 2021). This method has been left out in the initial research methods proposed to be used because it does not provide an in-depth perspective of what each interviewee may offer. Another alternative that could be used in the study is action research. This method combines actions and investigations to provide deeper insights into a research objective. However, Yinson has operations in 28 locations across the globe, and adopting this methodology could be too expensive and thus not feasible.
The proposed study will significantly benefit the industry both at the academic and the practical level. Concerning academic literature, there is scant information in the field; thus, the study will provide knowledge for scholars and decision-makers in various organizations. Specifically, this study will provide Yinson production with actional recommendations on tailoring its operations to ensure that all risks relating to system integrations are addressed. By identifying and solving these risks based on the available literature and internal knowledge, the organization could reduce the risks and gain a competitive advantage. Risk management studies are always subject to unknown events and black swans, which are unexpected and pose significant risks to organizations (Krausmann & Necci, 2021). Therefore, the recommendations gained from the study must be used with precautions, and the organizations must always stay flexible in case of any unexpected events.
Finally, while conducting the research, there will be ethical considerations, and the anonymity of the respondents will always be ensured. Confidentiality ensures that the research is ethical and legal and gives the respondents confidence to provide helpful information without the fear of retribution (Surmiak, 2019). All respondents must be aware that their data will be publicly published anonymously. Before the interviews of the questionnaires, the respondents must also sign a form to consent to be part of the academic research. Thus, the study will be able to provide high value for different users while not violating people’s rights to privacy and confidentiality.
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