Assessing the Impact of Procurement Strategies on Cost and Schedule Performance in Petroleum Engineering Projects in Ghana

Abstract

This study assessed the impact of procurement strategies on cost and schedule performance in petroleum engineering projects in Ghana, with a specific focus on Engineering, Procurement and Construction (EPC), Engineering, Procurement and Construction Management (EPCM), and turnkey procurement contracts within upstream and midstream petroleum projects. The study was motivated by the persistent challenges of cost overruns, project delays, procurement inefficiencies, and contractor performance issues affecting petroleum engineering projects in Ghana.

The study adopted a quantitative research approach using a descriptive and explanatory research design. Primary data was collected through structured questionnaires administered to 40 respondents selected from petroleum engineering firms, procurement departments, project management teams, contractors, consultants, and regulatory institutions within Ghana’s petroleum industry. The data collected was analysed using descriptive statistics, correlation analysis, and multiple regression analysis with the aid of the Statistical Package for Social Sciences (SPSS).

The findings revealed that procurement strategies significantly influence cost and schedule performance in petroleum engineering projects. EPC procurement strategy was found to improve project coordination, contractor accountability, and cost control. Turnkey procurement contracts were also found to enhance project delivery efficiency and reduce owner-related risks. EPCM procurement strategy improved procurement flexibility and owner participation but was associated with higher coordination risks and procurement complexities.

The study further established that procurement planning efficiency and contractor performance are the strongest determinants of successful project delivery. Effective procurement planning significantly reduced project delays and cost overruns, while competent contractor performance improved project coordination, schedule performance, and operational efficiency. The study also identified delayed material delivery, inflation, exchange rate volatility, equipment shortages, procurement delays, and contractor inefficiencies as major causes of project overruns in Ghana’s petroleum sector.

The study concludes that strategic procurement management is critical for improving project performance in petroleum engineering projects. The study therefore recommends adopting appropriate procurement strategies, strengthening procurement planning systems, improving contractor selection procedures, enhancing local contractor capacity, and strengthening procurement governance frameworks within Ghana’s petroleum industry.

The study contributes to existing knowledge by providing empirical evidence on the relationship between procurement strategies and project performance in Ghana’s petroleum engineering sector, and by offering practical recommendations to improve project delivery outcomes in the oil and gas industry.