Hence its findings can only be regarded as indicative

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Unformatted text preview: aken, it has been conducted within one company, usually by an employee of that organisation and has often not been published due to commercial sensitivity (for example, Burnside, 1998). There has only been one previous qualitative study researching the use of decision analysis across the whole oil industry (Fletcher and Dromgoole, 1996). However, as stated in Section 3.4 of Chapter 3, this study focused on the perceptions and beliefs of, and techniques used by, one functional area within the organisations active in the upstream. Hence, its findings can only be regarded as indicative rather than conclusive. There are also many quantitative studies of decision-making. As indicated in Chapter 2, where these have been centred on the use of decision analysis in investment appraisal decision-making by organisations, they have only provided an indication of how widely used a particular decision analysis technique is (for example see studies by Arnold and Hatzopoulous, 1999; Carr and Tomkins, 1998; Schuyler, 1997; Buckley et al., 1996 Fletcher and Dromgoole, 1996; Shao and Shao, 1993; Kim, Farragher and Crick, 1984; Stanley and Block, 1983; Wicks Kelly and Philippatos, 1982; Bavishi, 1981; Oblak and Helm, 1980 and Stonehill and Nathanson, 1968). They do not provide any insights, based on behavioural decision theory, into the reasons why some techniques fail to be 127 implemented and others succeed, and, more importantly, which techniques perform better than others do (Clemen, 1999). The research presented in this chapter differs from these studies. Using a qualitative methodology, it attempts to integrate perspectives from individuals employed in a variety of functions within organisations who are involved throughout the investment appraisal decision-making process. This allows insights to be gained into issues such as why organisations use certain techniques and yet reject others. Combining this with the review of the relevant behavioural decision theory literature (summarised in Section 2.4 of Chapter 2), allows the second research question that was proposed in Chapter 1, which aimed to ascertain which decision analysis techniques upstream companies use and to understand how they use them, to be answered. The chapter first establishes which techniques are currently used for investment appraisal in the upstream. Research by Schuyler (1997) and Fletcher and Dromgoole (1996) has suggested that there is a significant gap between practice and capability in the techniques used for investment appraisal in the upstream oil and gas industry. Chapter 5 presented the decision analysis tools currently available to the industry. Some of these techniques have only been applied to the oil industry recently and hence, were not available to companies at the time of these previous studies. The chapter begins by drawing on the research interviews to establish first, which techniques upstream companies now use for investment appraisal and second, if there is still a gap between current theory and practice in investment appraisal decisionmaking. This indication of current practice will be used in Chapter 7 to produce a ranking of the companies according to the sophistication of the decision anal...
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This document was uploaded on 03/30/2014.

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