22 Apr, 2013

The Value of Competent People

As Seen in SPE Talent & Technology

PART 1: Lessons from History: The Value of Competent People

PART 2: How to Build Competent People

By J. Ford Brett
Managing Director - PetroSkills

In the first article in this 2-part series, Ford Brett describes the likely cost to the oil and gas industry of the Big Crew Change – the waste of the equivalent of 20% of total E&P expenditures, or more than US $35 billion per year.  In the second article, he examines strategies to confront the looming competency gap.


“The fact that the industry will experience significant changes because of the Big Crew Change is well known.  What is not so well known is just how big the impact of this demographic shift might be. What kind of changes in performance might we expect if approximately 20% of the industry has fewer than 5 years of experience? Of course, it is impossible to predict the impact with complete accuracy, but a review of what happened to industry performance the last time approximately 20% of the industry had fewer than 5 years of experience might prove instructive. During the last boom, it was growth in activity, not experienced people retiring, that was the primary cause of the high percentage of personnel with limited experience. This is an important and possibly key difference between the situation in the 1980s and now.

“Even under the best of circumstances, it is difficult to measure the performance of technical professionals in the field. We can never answer with precision such questions as, “What is the quantitative impact of inexperienced personnel in a reservoir study, a well-log analysis, a drilling operation, or a problem-well diagnosis?” We know logically that there would be a detrimental effect, but, because it is difficult to put a specific value on technical competence, it is even more challenging to gauge the impact of its absence.

“Fortunately, there is one data set that can help provide insight into the quantitative impact of a skills shortage on performance: U.S. drilling performance since 1950…”

“Quality management begins by creating specific operational definitions that describe what something is and how it is measured. Competency management follows a similar path by specifically defining how competent someone is at a skill. This means that competency management starts with a complete definition of the skills necessary to perform specific tasks necessary for success. What gets measured gets managed; if you cannot measure competency, then you cannot manage it.

“But how do you measure competence? Fig. 1 shows a small example of how it is possible (Brett et. al. 2006). The figure is a small section of a Reservoir Engineering Competency Map. Such competency maps allow the skills of a particular individual to be quantitatively analyzed. The map lists all of the skills necessary for reservoir engineering (there are 134)…”


PART 1: Lessons from History: The Value of Competent People

PART 2: How to Build Competent People