These will be analysed in this section by answering

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Unformatted text preview: ons.” (Tocher, 1978 reprinted in French, 1989 p151) 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 ANALYSIS TECHNIQUES EFFECTIVE? Behavioural decision theory 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...
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This document was uploaded on 03/30/2014.

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