CASE STUDY

ROCKWELL PETROLEUM

This was a Project that involved the Designing and Constructing of an oil
Refinery, The Company, Rockwell Petroleum, had substantial experience in
Building refineries in the U.S.A., but none in other countries. The company also
owned and operated several refineries in the U.S.A.

Taking note of the huge Crude OH Reserves available in the Gulf and the
huge markets in Europe, Rockwell Petroleum decided to take the low-cost crude
from Qatar and process it in Germany.

However, since there are very few refineries operating in Europe, the
expertise in Design and Construction of Oil Refining and Petrochemical plants in
that region was weak. This also presented an opportunity for a European
Contracting Company, Schade Werke, to broaden its base and extend itself
technically and managerially to establish satisfactory long-term growth.

Schade Werke, had never built such a refinery before but had a sound
Design and construction team in the fertilizer and power station fields.

For Schade Werke, it was therefore a matter of prestige; for the

Americans it was nothing more than a pure business deal. Rockwell Petroleum
did not question their ability to do it. There was no handholding.

This, despite the fact. that for both it was the first time. Rockwell
Petroleum insisted on a fixed price contract. Schade Werke accepted, seeing ft
as a calculated business risk, worthwhile accepting in view of entry it would bring
them into a field which had hitherto been the monopoly of U.S. Contractors.

THE CHRONOLOGY AS IT HAPPENED ISAS FOLLOWS :-

1975 : Rockwell Petroleum discover a vast reserve of Crude Oil off Doha,

Qatar.
1977 : Rockwell Petroleum set up their European Headquarters in Bonn,
Germany
1981 : Rockwell plans the Bonn Refinery.
1983 : Invitations to Tender the-Refinery were sent out. Schade Werke were
among the Bidders.
1984. JANUARY : Contract Awarded to Schade Werke. A 30 month
construction Schedule was proposed
1984. MARCH : Designs approved and * Nominated' as frozen.
1984 OCTOBER : Design changes in plenty.
1985 MAY : Mechanical Erection begins but owing to problems of appointing
a Sub-contractor by Schade Werke, delayed.
1986 JANUARY : Industrial Disputes and stoppages recorded so far :12
1986 JUNE: Scheduled completion date , but final freezing of design Is still
going on.
1986 DECEMBER: A report on the money spent so far and yet to be spent
shows substantial over- run.

1987 MAY : Mechanical completion achieved.

CASE STUDY QUESTIONS

1. Was the main culprit the fixed price contract ?
2. Was if misfortune or mismanagement ?
3. Reflect on the case. Why do you think the chronology of events happened
as enumerated. .