Shell over-reliant on outside contractors for cost/project management - report 11.07.2005, 02:14 AM LONDON (AFX) -

An internal analysis at Royal Dutch Shell has found the company over-reliant on outside contractors to manage large exploration and production projects, the Financial Times reported. Ed Merrow, an outside consultant commissioned by Shell to evaluate project management, found the company was 'almost wholly dependent' on contractors for critical functions, including scheduling and cost control. The presentation evaluated 13 projects. Shell's dependence on contractors may help explain why costs have spiralled at some of its largest projects, the newspaper noted. This summer, the company said the price tag of Sakhalin-2, a giant natural gas project in eastern Russia, had doubled to 20 bln usd, but gave few details about why or how. Shell CEO Jeroen van der Veer recently set up a 'project academy' to improve the company's ability to manage large projects.