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Barnett Waddingham
0333 11 11 222
In a high cost, low commodity price environment, the depth and quality of decision analysis is ever more important. Bringing an actuarial approach to complex decision problems, we can ensure that risk and uncertainty are modelled in full depth in an influence diagram or decision tree so that a decision can be evaluated according to multiple criteria.

It is often said that the value of information derives entirely from its ability to affect a decision choice. We disagree!

We have specific expertise in:

  • Modelling value criteria
    Ensuring that the 'payoff' in a decision model can reflect the impact of a decision on your asset or aggregated risk profile, as well as simpler (but perhaps incomplete) criteria such as NPV or IRR. This improves estimation of the true Value of Information, hence for example the optimum effort to apply to Appraisal. How much appraisal is enough? A recent study by IPA has shown that lack of sufficient appraisal is one of the key indicators for unnecessary loss of value, or poor project performance in the Development and Production stages of the asset lifecycle.
  • Estimating the Value of Flexibility
    How does the ability to change track in future, when circumstances change, affect the optimum decision now?
  • Estimating the resilience and robustness of a decision
    As the probabilities in a decision model are uncertain, how likely is it that a particular decision is not in fact optimal? If the probability estimates are wrong, which ones are most likely to bite, leading to the wrong choice and loss of value?
  • Documenting the rationale behind decisions
    Including an assessment of the underlying data quality, models and reportable outputs. We believe good documentation, especially regarding expert judgment, can help to demonstrate the quality of a decision, which improves its value.
  • Assessing data quality and governance
    Answering questions such as 'How good are accuracy and completeness, and how can this be preserved across stage gates cost-effectively?' and 'How material are the gaps, and how proportionate to results is the cost to remedy these?'.

Related knowledge and resources

Blogs

  • Picture for Oil and gas: drilling down into good decision making
    Oil and gas: drilling down into good decision making

    In response to a recent article, Iain Poole considers dealing with uncertainty in the oil and gas industry and highlights some of the key challenges in terms of general decision making, and in light of the current turbulent environment.

  • Picture for Perspectives on estimation and modelling for large engineering projects
    Perspectives on estimation and modelling for large engineering projects

    In a recent survey of over 160 Upstream 'megaprojects', with an average project size of $6.6 billion, EY identified 65% of projects as experiencing cost over-runs, and 78% experienced delays. We look at the inherent uncertainty with large CAPEX projects.

  • Picture for Maximising economic recovery from a chilly North Sea
    Maximising economic recovery from a chilly North Sea

    Is Competition law having a chilling effect on the Oil and Gas Authority’s (OGA) call to 'Maximise Economic Recovery' from the UK North Sea? The UK’s new OGA has a primary responsibility to implement the recommendations of a report by Sir Ian Wood.

  • New services for Oil and Gas exploration companies

    Ground-breaking new services will use the principles of actuarial science that are a key part of our existing insurance and pensions business, and apply them to the modelling and analysis undertaken by companies in the oil and gas exploration industry.

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