A Risk Analysis‐Best Worst Method Based Model for Selection of the Most Appropriate Contract Strategy for Onshore Drilling Projects in the Iranian Petroleum Industry

Abstract

The pre-project planning phase has a significant impact on the achievement of project objectives because during this stage, major decisions including involving contract strategies are made with a high degree of uncertainty. Studies show that the contract type can play a unique role in the achievement of project success. On the other hand, drilling projects can be considered as one of the most critical types of projects in the petroleum industry. In this research, a novel risk based best-worst method (risk-BWM) is proposed for solving the issue of selecting the best contract strategy. A three level methodology was designed; firstly, the risk breakdown structure (RBS) of drilling projects was created in four levels including one heading in level 0, eight main areas of risk in level 1, 34 sub-areas of risk in level 2, and finally, 217 risk items in level 3. Secondly and on the basis of BWM, the weights of risk factors were determined as the selection criteria and consequently the best and the worst criteria were specified. Finally, using pair-wise comparisons between six types of drilling prevalent in contracts, the most appropriate contract type was proposed. The contribution of this study is the development of a generic RBS for drilling projects and application of the risk factors for the first time for the selection of contract type using the BWM method, which has the potential of being adapted for other types of underground projects.