Process and Project Model of the Russian Oil Industry Management:

Impact on Sustainable Development

Dmitry Rodnyansky

, Ivan Makarov

2,4 b

, Victor Kolesnikov

, Oleg Levchegov

and Elena Pokidova

Kazan federal university, Kazan, Russia

Financial University under the Government of the Russian Federation, Lipetsk branch, Lipetsk, Russia

Institute of business career, Moscow, Russia

Moscow State University of Technology and Management named after K.G. Razumovski, Moscow, Russia

Keywords: Project Management, Oil Industry, Process and Project Model.

Abstract: Traditional methods and instruments of state regulation of the oil industry are losing their effectiveness. In

the context of a significant influence of external factors (OPEC + agreements, COVID-19), digital

transformation of business and public administration, as well as an increase in the speed of changes in the

economic system, specialized bodies are faced with the need to improve the tools of sectoral management.

Justification of the need to transform the system of state regulation of the oil industry in Russia, as well as the

development of the concept and definition of tools and elements of the process-design model of sectoral

management in this area.The validity and reliability of the conclusions obtained in the course of this study are

provided by the use of analysis methods such as statistical and retrospective analysis, as well as mathematical

modeling tools. The article proposes a concept of a process-design model of sectoral management of the oil

industry in Russia, substantiates its advantages, and describes its subjects, elements and mechanisms.

1 INTRODUCTION

Over the past 15-20 years, project management has

gone through several stages of development - from a

new management style, or rather a set of skills and

techniques used in the activities of creative, audit and

construction companies to a whole paradigm and

philosophy of management (Brunet, 2018), (Eklund

and Simpson, 2019), (Leybourne, 2012), (Salovaara

et al., 2020). At the same time that the concept of

project management was gaining ground in business

schools and large corporations, research was

emerging looking at the benefits of using routine,

process and structure, and combining the two

concepts of management to improve productivity

(Wuliang et al., 2010), (Artto et al., 2008), (Atkinson,

1999).

https://orcid.org/0000-0003-1389-1503

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https://orcid.org/0000-0002-5754-8670

This is an important issue, not least because there

is currently a significant imbalance between the

declared principles, technologies and management

skills spelled out in various international standards,

such as PMI, IPMA, and the actual actions of project

managers.

The active implementation of the project

management methodology and tools, including in the

public sphere, was based on the assumption that the

use of a standard project management structure and

system would increase project efficiency and increase

the number of successful projects. However, some

authors have noted that there are costs, risks and

threats to implementing a design approach because

the methodology usually requires tracking, signing

and using guidelines and checklists. In some cases,

the volume of documentation can be very time-

consuming and is often viewed as the main

Rodnyansky, D., Makarov, I., Kolesnikov, V., Levchegov, O. and Pokidova, E.

Process and Project Model of the Russian Oil Industry Management: Impact on Sustainable Development.

DOI: 10.5220/0010586700940100

In Proceedings of the International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure (ISSDRI 2021), pages 94-100

ISBN: 978-989-758-519-7

disadvantage of using project management

techniques and tools (Dicks, 2000), (Kerzner, 2001).

According to a number of authors, for any use of

project management tools, there must be an element

of continuous assessment and improvement, which

takes time and effort, increases management costs

and, in essence, is already an element of process

management. Thus, it seems wrong to oppose the

process and project management approaches.

A number of researchers also indicated that

further work is needed to explore this assumption that

project management methodologies increase success,

arguing that the concept of project success is too

narrowly focused (considering only some aspects of

project management practice), and sample sizes in a

number of studies were are too small to provide

statistically reliable evidence (Thomas and Mullaly,

2007).

Over the past decade, significant attention has

been paid to changing management paradigms, as

evidenced by trends such as the destruction of

hierarchies, the elimination of "command and

control", and the formation of new concepts, such as

new public management or Management 2.0.

Most of these new developments and concepts are

aimed at uncovering and solving problems associated

with the complexity and ambiguity in planning and

executing projects. Another challenge is the increase

in improvised work, often driven by the need to help

with time and cost overruns or volume changes. There

are also problems associated with the changing

demographics of project workers, which leads to the

need to adopt new ways of managing project

negotiations and activities, as well as to amend and

change the adopted project procedures and

procedures. These problems dictate the changes that

scientists and practitioners are trying to implement in

the system of strategic and operational management

of companies, regions and states.

2 MATERIALS AND METHODS

One of the disadvantages of the widespread use of

project management, in addition to its obvious

limitations associated with the type of activity and the

specifics of the organization, is the lack of creativity

and a creative or improvisational component in the

process of project implementation. At the same time,

it was precisely the creative, non-standard approach

to solving the assigned tasks that often led to more

successful and effective methods of achieving goals.

In this context, the concept of Australian scientists

presented by them on the pages of the International

journal of project management (Too and Weaver,

2013) seems to be remarkable. In their work, they

propose to distinguish between two English words -

governance and management. Closest to the word

governance in the Russian language is the concept of

"leadership" or "government". In the context of an

organization, governance provides a framework for

ethical decision-making and management action that

is grounded in transparency, accountability and roles.

Thus, the core values of a well-governed organization

are within the purview of the leadership of an

organization, which includes its vision, values and

ethics, a commitment to corporate social

responsibility, and how the “board” manages itself.

These values are not absolute and should be the sole

responsibility of the "governing board" or its

equivalent.

Responsibility for the overall management system

is assigned to the "board" or "management", and

responsibility for the implementation of certain

aspects of the management system is transferred to

the appropriate levels of management together with

the necessary authority to carry out management

work in the established functional areas. So,

summarizing the concept described above, leadership

or "board" includes a set of relationships between the

company's management, its board, shareholders and

other interested parties. Management also provides a

framework by which the objectives of the company

are set and the means of achieving those objectives

and monitoring performance are determined. A good

"governing board" should stimulate management and

the board of directors to achieve goals that are in the

best interests of the company and its shareholders.

Management defines the structures used by the

organization, assigns rights and responsibilities

within those structures, and requires assurance that

management operates effectively and appropriately

within defined structures. The role of management is

to govern the organization within the framework

defined by a system of governance or "governing".

All the aspects noted above apply to process and

project management both at the corporate, and at the

sectoral and state levels.

By analogy with the concept described above,

"management" or "board" is responsible for all

aspects of project and process management, but does

not replace them, but creates conditions for effective

interaction between managers in their areas of

responsibility. In fig. 1 schematically shows the

separation of these three management hierarchies

within the framework of the described concept.

Process and Project Model of the Russian Oil Industry Management: Impact on Sustainable Development

Figure 1: Distribution of management levels.

All further generalizations and conclusions in this

work are based on the use of this concept.

3 RESULTS

It is important to note that the system of process or

project management cannot function without

effective support of the management system of the

economic system as a whole. Thus, a project-based

approach to management in such a multi-project

environment as an industry or the state as a whole has

two key functions. The first function is deciding

which projects should be approved, supported,

financed and worked out in detail. At the same time,

the levels of acceptance, management and execution

of projects are different. In the oil industry, for

example, at the industry level, projects can be adopted

by the President, the Government, or supervising

deputy prime ministers, and executed and coordinated

by the relevant ministry of energy. The second

function of a project management system in this

context is to oversee and ensure implementation.

These functions include aligning project provisions

with current strategic industry development

documents, long-term planning concepts, and

answering the question of how projects approved

under this strategy contribute to the achievement of

strategic goals.

A similar situation is observed in the

implementation of the process approach to

management. In most sectors of the economy, a

number of processes are continuous and constant.

These processes need to be managed, coordinated and

interacted between different levels of processes and

management decision making. It is obvious that the

success of the implementation of any project largely

depends on the quality of the organization of process

management in the field. For this reason, it seems that

the only correct solution to improve the quality of

sectoral management is the introduction of a process-

project management model, as well as the

implementation of a new project management toolkit

and elements of the process approach into the sectoral

management system.

In fig. 2 presents the main elements of the sectoral

management system. Moreover, it is important to note

that these tools, as well as the managers responsible

for their use and implementation in the management

system, are not only in constant interaction with each

other, but also in a periodic situation of conflict over

resources, powers and areas of responsibility, which,

in their turn, leads to a decrease in the effectiveness

of industry management and regulation.

Figure 2: The main elements of the sectoral management

system

At the same time, it is important to note that

conflicts mainly arise during the contact of individual

elements of process and project management systems.

A system of leadership, coordination, or

“governance,” as described above, acts as an arbiter

in dispute resolution. However, the wider the scope

of the tasks set, the more often and more acute

conflicts can arise between managers and specialists.

It is to minimize such conflicts, as well as to achieve

a synergistic effect, that it is proposed to transform

the design tools and elements of the process approach

into a single process-project model of sectoral

management. At the same time, it should be noted that

the governance system is also included in this model

for effective coordination of project and process

elements of management. A schematic representation

of the process design model is shown in Fig. 3.

Project management

Process management

Governance

Sectoral management

Governance

Project

management

Process

management

ISSDRI 2021 - International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure

Figure 3: Image of process-project (process-design) model

Process management in corporations has become

widespread. There are a huge number of different

tools and mechanisms of process management,

among which the ISO 9000 quality management

system standards, the balanced performance

scorecard (BSC) toolkit, the Deming PDCA cycle and

many others stand out. The basis of the process

management concept lies in the development of

uniform standards of processes, goals, objectives and

algorithms for their achievement, so that the

management system functions accurately and in a

timely manner, regardless of personal factors and the

impact of the external environment. In turn, with

significant changes in the macroenvironment, the

management can change the settings of processes,

improving and thereby developing process

management.

Due to the specifics of the public administration

system, not all process management tools can be used

in this area, but in recent years there has been an

active borrowing of technologies, mechanisms and

tools with their subsequent adaptation for the needs

of the public sector. Thus, one of the most common

mechanisms for the implementation of the process

approach to management is a system of balanced

performance indicators adapted to the realities of

public administration. Process management in federal

executive bodies, which are actually regulators of the

country's sectoral development, acts as a basic tool for

the implementation of both current and strategic

management, a platform for the implementation of

national and federal projects and programs. Indeed,

without a clearly and effectively built operational

management system, the implementation of any

projects seems impossible.

Thus, for effective work and high-quality sectoral

management of the oil industry in the Russian

Federation, it seems necessary to have a competent

combination of both project and process management

tools in order to achieve long-term goals and

objectives specified in the basic regulations.

At present, when analyzing the main directions

and tools of sectoral management of the country's oil

industry, it can be concluded that there is a significant

asymmetry in favor of project management. The

importance of a project management approach has

received more and more attention and attention in

recent years. In each region and in each federal

executive body, so-called project offices have been

created. At the same time, the desire to present in the

form of a project any process and any phenomenon,

which has recently been observed in almost all

ministries, agencies and services, seems

counterproductive. The rejection of the classical

process management, the methodology for setting,

monitoring and adjusting goals and plans leads to

excessive bureaucratization of relations, expansion of

the project portfolio and its filling with quasi-projects

and pseudo-projects (Gaspar Ravagnani et al., 2012),

(Marques et al., 2014), (Thurber, 2011), (Paz Antolín

and Ramírez Cendrero, 2013), (Bolivar et al., 2015),

(Clegg et al., 2018).

4 DISCUSSIONS

The problem that this work is aimed at is that the

traditional methods of sectoral management of the oil

industry, both design and others (federal target

programs, budgetary and tax instruments,

administrative regulations, etc.) in the modern

dynamically changing world have a number of

limitations.

Firstly, it is the existing contradictions between

the short-term and long-term goals of the state and oil

industry enterprises, which creates an imbalance in

the process of implementing regulatory functions.

Secondly, the inconsistency of a number of

government and corporate decisions made with the

provisions of the Energy Strategy of the Russian

Federation, as well as the lack of mechanisms for

coordinating the provisions of various federal target

programs and projects with each other. Third, at

present, sectoral management in the oil sector is

carried out practically without using the methodology

and tools of process management, on the basis of a

project approach and "manual" management.

Therefore, the scientific problem is to determine the

tools of project and process management, which will

be implemented in the system of state sectoral

management of the oil industry. In this regard, it is

proposed to create a multi-factor process-project

model of sectoral management of the oil industry in

the Russian Federation and its constituent entities,

which will allow, firstly, to optimize the instruments

Process-project

model of

industry state

management

Project

management

toolkit

Process

management

elements

Process and Project Model of the Russian Oil Industry Management: Impact on Sustainable Development

of state regulation of both the industry as a whole, and

organizations and enterprises of this sphere in

particular, second, to create a tool for coordinating

and assessing the regulatory impact of various federal

target programs, projects, and enterprise development

concepts from the point of view of the state's long-

term strategic interests in the oil industry. This model

will increase the speed, quality and efficiency of

government decision-making in the oil industry.

In order to improve the quality and efficiency of

the sectoral management of the oil industry in Russia,

a combination of project and process management

tools in this area is proposed. At the same time, it is

proposed to significantly expand the tools and

mechanisms of both project and process management

of the industry.

So, at present, the Russian oil industry is

characterized by the same set of project and process

management tools that are used by the relevant

government authorities to regulate and manage any

other industry. The tools of project management

include the Energy Strategy of Russia until 2030, the

forecast of scientific and technological development

of the fuel and energy sector and a number of other

key regulations with a project structure - specific

goals and objectives, the stated implementation

period and budget to achieve the set goals. Also,

elements of the project management system are

national projects, national programs, federal projects

described above. Various departmental and sectoral

projects can also be attributed to project management

tools, for example, the project of digitalization of the

activities of the Ministry of Energy, digitalization of

production, etc.

The process tools of sectoral management of the

oil industry in Russia include all federal laws,

government decrees, orders of the Ministry,

regulations and other regulatory legal acts that

regulate current issues related to taxation, excise

taxes, fines, duties, licenses, auctions, etc. ... A

separate place in this list is occupied by the Doctrine

of Energy Security of the Russian Federation, which

spells out the main challenges and threats to the

development of energy industries, as well as possible

reactions of state authorities and corporations to

minimize these threats. In fact, most of the regulation

and management of the Russian oil industry is carried

out using process management tools.

It seems expedient to combine the two

approaches, while adding tools and mechanisms of

both project and process approaches in order to form

a process-project model of sectoral management of

the Russian oil industry. Thus, in the previous

chapters, it was shown that some of the tools that have

a significant impact on the oil market and the oil

industry are used separately, by different actors and

without appropriate coordination with other areas of

activity. Formally, such instruments are separate

elements, processes or actions of various economic

entities and are not included in the list of sectoral

management instruments, however, in fact, they can

have no less, and often a much greater impact on the

economic indicators of the sector's development. We

are talking about such instruments as integration

processes, intersectoral interaction, the formation and

development of energy clusters, the actions of

companies with state participation and their

integration interactions. All of these areas of activity

should be considered as tools (mechanisms) for the

implementation of the process-design model of

sectoral management of the oil industry in Russia. In

fig. 54 schematically presents the elements of the

process-design model of the sectoral management of

the oil industry.

The model shown in the figure is a combination

of project management tools and process

management elements. At the same time, in the white

rectangles there are already existing, implemented

and operating in the system of sectoral management

of the oil industry tools and elements. The blue

rectangles highlight project management tools and

process management elements that exist

independently, but are not included in the industry

management architecture.

The formation and further development of the

process-project model involves active interaction and

combination of various tools (mechanisms) of both

process and project management in order to improve

the quality and efficiency of public administration in

this area.

ISSDRI 2021 - International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure

Figure 4: Elements of the process-design model of sectoral management of the oil industry

Another important component of the process-

design model is the list of decision-makers and

actually engaged in sectoral management in the oil

industry. It seems reasonable that representatives of

all sectors of the economy have the opportunity to

influence the development of programs, tools and

mechanisms for sectoral management of the relevant

area (Fig. 5).

Figure 5: Subjects of the process-project model of the

sectoral management of the oil industry of the Russian

Federation

5 CONCLUSIONS

Due to the fact that within the framework of the

formation of the process-project model of the sectoral

management of the oil industry of the Russian

Federation, some project management tools and

elements of process management are additionally

included, it seems reasonable to conduct a more

detailed assessment of the consequences of the

integrated use of such tools and mechanisms. So, at

present, in accordance with the current legislation, the

assessment of the regulatory impact of a regulatory

legal act of a constituent entity of the federation must

be made without fail. At the same time, at the federal

level only federal laws go through a detailed analysis

of the consequences of the adoption of normative

legal acts. Decrees of ministries, Decrees of the

Government may not be included in the list of acts in

respect of which it is necessary to conduct a

regulatory impact analysis.

A feature of the process-design model, according

to the author, is the use of the tools described above

in such a way that, within the framework of this

model, a single mechanism for analyzing the

opportunities, threats and consequences of making

Normative regulation

(strategy, forecast for

the technological

development)

Project management toolkit

Process management

elements

National projects,

national programs, FTP,

departmental projects

Economic regulation

(taxes, duties, tariffs)

Administrative

regulation (licenses,

quotas)

Planning, organization,

coordination, control of

industry processes

Process-project model

of sectoral

management of the oil

industry in Russia

Subjects of the process-project model

Government of the Russian

Federation and federal executive

authorities

Commission under the President

of the Russian Federation for the

strategic development of the fuel

and energy complex

State-owned enterprises,

private business

structures

NGOs, expert

community,

environmental

organizations

Process and Project Model of the Russian Oil Industry Management: Impact on Sustainable Development

management decisions was built. Thus, within the

framework of the process-design model, a mechanism

should be formed for the long-term assessment of the

consequences from the use of such inherently

different tools as monitoring integration processes,

the activities of companies with state participation

and the implementation of federal target programs.

All this will make it possible to achieve management

synergy and improve not only the quality of decisions

made, but also improve the socio-economic indicators

of the state's development.

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