Industries Facing Challenge of Project-Skills Gap

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Researched by Industrial Info resources (Sugar Land, Texas)--A major element in the pressures of project performance and cost that developers are feeling in the oil and gas industry is the scarcity of experienced people able to support and execute growth plans, Booz Allen Hamilton (McLean, Virginia) stated in a recent study.

This is a global phenomenon but is hitting the Gulf Cooperation Council and Middle East North Africa region's countries particularly hard where the project boom is exacerbating the scarcity of skilled workers.

The study points to several factors contributing to the crisis in the industry:

In the aging industry workforce, 50% of staff is between 40 and 50 years old, and only 15% are junior recruits. The skills gap is compounded by the fact that up to half the workforce will probably retire within the next 10 years.

The gap is made more noticeable by the fact that it takes up to three years for staff to develop basic industry operating competence and for many professional disciplines up to 10 years or more.

The study found that in 22 leading U.S. oil and gas companies, there were significant shortages in the sub-surface engineering and other technical disciplines. About 40% of industry employers worldwide reported difficulties in filling positions.

Changes in the nature of the oil industry have increased workloads. The "more difficult" extraction of oil required customized technology and project management expertise. Another issue is the geology of reservoirs with more complex formations and more challenging physical access (e.g. deep water) requiring different technology applications.

The costs of skilled workers to organizations are escalating. The salary of a geologist with 10 years of experience increased more than 25% from 2003 to 2006. Salaries for oil-drilling rig jobs increased 60% during the same period. Companies have also been forced to hire retirees as contractors -- at twice the market price.

Dr. Raed Kombargi of Booz Allen saw the issues as a strategic business challenge and quoted the example of one oil company that has created the position of Director of Capabilities in its technology group. "The result of this specialized position enables other staff with strengths and capabilities for specific job roles to be recognized for further development. It reduced the time needed to develop staff to the same high levels of competence expected in the organization," he said.

Demand solutions to the problem included simplifying operations by using more technology and reducing bureaucracy, changing ways of working by using simplified review processes for minor projects, proactive maintenance to ensure asset availability, implementing new technologies and automation, real-time monitoring to enable real-time optimization decisions that increase top-line production, and outsourcing some support transactional activities.

The problems of skills shortages are being felt across all industrial sectors as global competition increases, and the solutions suggested in the study are applicable across the board. The study suggests a dual approach in focusing on recruiting, resourcing, developing and retaining talent, but more importantly, changing the method of doing business and positively changing the magnitude of demand for talent in the first place. For more information, see related December 18, 2007, article - Middle East Petrochem Projects Face Crippling Cost Increases.

Industrial Info Resources (IIR) is the leading marketing information services company for the industrial process, heavy manufacturing and energy-related markets throughout the world. Celebrating its 25th anniversary, IIR provides accurate and timely intelligence featuring plant and project information databases, focused market databases, industry forecasting, key industry contacts, industry and territorial map products, direct marketing services and applications, and daily industry news.