Unformatted text preview: ons.” (Tocher, 1978 reprinted in French, 1989
Figure 8.1 shows the relationships between these two areas of the decision theory
literature. Recently, researchers have realised that to unite the two seemingly diametrically opposite views, empirical research needs to establish if there is a
relationship between the use of decision analysis and successful decision-making
(Clemen and Kwit, 2000; Clemen, 1999). Clemen (1999 p2) believes that:
“…such research could connect the … existing areas into a truly unified body
of literature” Decision analysis
How we should decide ARE DECISION
How we do decide Figure 8.1: The relationship between decision analysis and behavioural decision theory (adapted from
Clemen, 1999) However, as indicated above in section 8.2, such studies have been slow to appear,
doubtless because of the threat they represent to decision analysts:
“Asking whether decision analysis works is risky. What if the answer is
negative? The contribution will clearly be scientifically valuable, but many
individuals – consultants, academics, instructors – with a vested interest in
decision analysis could lose standing clients, or even jobs.” (Clemen, 1999
pp23-24) 192 The research presented in this thesis then can clearly be seen to provide a useful
contribution to the theoretical debate, by establishing the existence of such an
association in the upstream oil and gas industry.
8.4 IMPLICATIONS OF THE STUDY FOR PRACTITIONERS
The findings presented in this thesis clearly have implications for practitioners in the
oil industry. These will be analysed in this section.
By answering the first research question, the study has provided an indication of
which decision analysis techniques are the most appropriate for upstream companies
to use for investment appraisal and indicated how these tools can be used together.
Companies can use this as a template to modify their own investment appraisal
approach. The model of current practice produced by answering the second research
question, showed which tools companies in the upstream use. This will allow organisations to compare their processes with the rest of the industry and make any
appropriate modifications. This model also permitted the researcher to identify best
practices in those companies that currently use decision analysis (summarised in
figure 8.2) and these should be communicated to companies through publications in
industry journals such as Journal of Petroleum Technology.
• The decision analysis approach used by the company is formalised. Often manuals are available to
employees. The manuals detail how the limitations and gaps in the techniques (for example, the distribution
shapes to be used in Monte Carlo simulation) are to be overcome.
• Decision analysis software available throughout the organisation.
• Employees know the decision policy used by the company.
• Organisations have consistent definitions of risk and uncertainty.
• All employees have the ability to under...
View Full Document
This document was uploaded on 03/30/2014.
- Summer '14
- The Land