Evaluating the Cost Efficiency of Systems Engineering in Oil and Gas Projects

Studies of systems engineering applications have revealed that systems engineering (SE) has a high potential for transferring economically inefficient oil and gas projects into a profitable zone due to preserving the value created at the concept stage right up to the implementation stage. To implement any project, including an organizational one, the company must have an economic justification for innovation. Studies into the global experience of assessing SE efficiency based on projects of various types have revealed the lack of a universal assessment method; however, individual studies have potential to be used in developing a method for quantifying the value of SE in oil and gas projects. Considering this fact, we developed our own method and prototype to assess the economic effect from the introduction of SE into oil and gas projects. The method is based on a decision tree used to calculate the Net Present Value considering the probability of projects' success and failure in terms of budget and deadlines. This allowed us to predict the effect from introducing SE to an oil company's capital project. The results obtained demonstrated the model's performance capability and its possible applications in project resource planning stages.