In the oilfield environment, Integrated Project Management (IPM) is a turnkey solution to drill and complete a well or a number of wells. A single contractor is selected to deliver a well. Focusing on the complete project, using in-house expertise and 3rd party services to complement the missing scope, service companies are able to deliver far better results, than using a conventional approach. Technology selection, collaboration, integration and aligned objectives are key success drivers.
IPM projects could be procured in a way that aligns objectives of an operator and a service company and provides incentives to deliver a project faster, better and safer. There is a variety of options used to structure the commercial elements of IPM contracts and could be pain-share & gain-share, reimbursable price list or lump sum. Each having its own advantages and disadvantages, the degree of complexity and risk the operator is willing to take, will drive the decision which model to use. One of the key benefits for operators in selecting the IPM approach is project management team's ability to apply the lessons learnt from well to well, thus reducing costs.
IPM contracting strategy has its own shortcomings, as well. When a contract is not structured correctly, disputes are common, as the nature of risk changes due to earlier unknowns and service companies are seeking to recover extra and unplanned expenditures. In addition, expertise and market power of IMP service companies with 3rd party services and materials is not as good and high as the operator might have.
Reportedly, a major overspent for IPM providers comes from services that are not their core business and outsourcing. Those include drilling rigs, casing, wellheads, logistics, vessels, civil works and a like. On some projects, the degree of outsourcing can reach as much as 40% of IPM scope.