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Unformatted text preview: ent appraisal process and employees’ satisfaction with the process; and • the actual decision (the “is”) generally, only deviates from that recommended by decision analysis models (the “ought”), when the analysis is poorly implemented, unsophisticated and the decision-makers are unconvinced of the value of decision analysis. It has also suggested that at least part of the reason for the gap between practice and capability is that: 151 • There are theoretical gaps in some of the techniques (for example, the lack of prescription in Monte Carlo simulation of the shape of the probability distribution to be used to model the reservoir parameters of reservoir rocks of similar lithology and water depth); • decision-makers’ perceptions of decision analysis are closely aligned to the earlier definitions of decision analysis and decision-makers’ perceive decision analysis to be a threat; and • decision-makers are not convinced of the value of decision analysis. The section has also indicated that current situation is exacerbated since there has been no study conducted that has found a link between use of decision analysis and good organisational performance. 6.4 A MODEL OF CURRENT PRACTICE The observations expressed in the previous sections are captured here by a model of current practice in investment appraisal in the upstream oil and gas industry. The model presented has been modified and developed by abstracting from the insights into decision-making at different levels within operating companies gained from the research interviews discussed in sections 6.2 and 6.3, and is informed by the behavioural decision theory literature which was presented in Section 2.4 of Chapter 2. Variations of the model have been shown to interviewees and the version that is presented here has been acknowledged by employees in the oil and gas industry to be an accurate description of current practice in investment appraisal. The respondents from Companies C and D said of the latest version: “I think you’re right. You’ve basically captured it.” (C); and, “I saw this diagram and I can see a lot of what I’ve come across in here” (D) In this section, the current version of model will be presented. The model is twodimensional. The axes of the model will be explained and justified using quotes from the research interviews. The interviewed companies will be plotted on the two-axes. 152 These results can then be interpreted and this confirms many of the observations made in section 6.3. In particular it highlights the need for a study to investigate the relationship between the use of decision analysis and organisational performance. The x-axis in the model relates to the number of decision analysis techniques used for investment appraisal decisions. The quotes from the interviews presented above clearly indicate that there is variation in the number of decision analysis tools used by companies for investment appraisal decisions. Some are aware of al...
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This document was uploaded on 03/30/2014.

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