Capital Cost Estimating
@ Fluor
June 2006
Arjen Blok
Chief estimator Haarlem
Fluor Overview
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Publicly owned engineering, procurement,
construction and maintenance company
– 2005 revenues of $13.2 billion
– 2005 new awards: $12.5 billion
– 2005 backlog: $14.9 billion
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37,000 employees worldwide
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Offices in more than 25 countries
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Major European offices:
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Haarlem, the Netherlands;
Madrid, Spain;
Camberley,UK; and
Gliwice, Poland.
Consistently one of the world’s safest
contractors
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Presentation purpose
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EPC contractors current outlook
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EPC contractors view on Estimating
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Integration of Estimating tools in engineering
environment
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Aspen Kbase solution
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EAME Market Summary
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Strong Upstream Oil and gas markets
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Refining upgrades/capacity expansions, new plants in Middle East
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Drivers: high prices, reserve replacement, energy supply security, product demand
Thriving LNG and gas processing sector
Complex projects drive increased client capex spending
Up to $50 billion in new contracts expected in ME alone in 2006
National oil companies less reliant on international oil majors
Fluor is pursuing about $20bn in regional prospects
Market focus shifts from clean fuels to conversion
Gas-to-Liquids, Integrated Gasification Combined Cycle
Regulatory environment drives European Union biofuels projects
New Petrochems/Chemicals complexes, primarily in Middle East
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Chemical/plastics opportunities developing
Chemical markets may be peaking, downturn expected 2009 - 2011
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EAME Market Summary
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Power Generators focus on capacity shortages / fuel supply
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Market risks
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Carbon Agenda drives environmental upgrades, emissions trading
European Union market deregulation, M&A activity
Nuclear new-build debate
Shortage of skilled personnel
Geopolitics / political instability
Feedstock / material costs
Regulatory / environmental issues
Contractor Issues
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Record backlog levels resulting in very selective bidding
More lump sum conversion contracts
Pressure on staffing, use of full service low cost engineering centres
Supply chain management, global procurement to contain equipment/ material costs
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Impact on Operations
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Selectivity
– Business risk assessment
– Early indication of cost for investment and pursuit decisions
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Lump sum conversion contracts
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Transparency and accuracy of estimates
Joint development
High focus on contingencies and allowances
Estimate centric execution / Change management
Pressure on staffing  dispersed execution  interfaces
– Growth of GEC component, multiple offices
– Partnering
– National companies
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Supply chain management, global procurement for equip. & materials
– Price instability & risk
– Out of sequence engineering
– Increased focus on quantities
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Quality
– Increased audits, inspection
– Reliability is key
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EPC contractor view on Estimating
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Why preparing estimates
– Bidding work
• EPCm Services
• EPC
– Service in project development
• Support investment decisions
• Project execution basis
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Capex Cost only
– Engineering
– Procurement equipment & materials
– Prefabrication
– Erection (up to Mechanical Completion)
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EPC contractor view on Cap Cost
Estimating
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Fluor follows AACE classification rules 18R-97
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EPC contractor view on Cap Cost
Estimating
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Estimating tool = AspenTech Kbase
– Design estimating tool, provided with
• Scope & Construction models, Design rules & Engineering
rules of thumb => Quantities
• Pricing & labour basis
– Estimating scope defined by available engineering data
• Equipment data, Flow sheets , Plot Plan, etc
– The earlier the estimate, the more use of Kbase
technology
• Class 4 & 3
– Class 2
• Replace Kbase models by BE info & execution plan
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Integrated Design Build SM (IDB)
Data Ownership
Data Release
Data Status
Single Data Entry
Change Notification
History Trail
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Estimating data flow
General specifications
Equipment data
P&ID information
Area Information
Kbase
Utility Systems
Plot plan
information
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Connection IDB -> Kbase
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AspenTech solution: API
– Application Programming Interfaces
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Allows automated data sharing in a controlled manner
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Considerations
– Quality of data
– Ownership of data
– Timing / availability of data
– Status of data
– Revision of data
– Timing of activities for engineering disciplines is
influenced by estimating
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Fluor’s API’s
Area Manager
Aspen Zyqad
Equipment API
Electronic
Equipment
List
Kbase
Utility Systems API
MHCD
Bulk API
3D Model
Piping Manual MTO
INTOOLS
Instrument Manual MTO
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Equipment API
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Obtain Equipment data from Kbase to Excel
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Import data from Excel file back to Kbase
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Advantages
– More simple input of equipment data
– Link from Kbase to any obtained excel
equipment list
– Possibility to make use of applicable data
from other electronic sources such as Aspen
Zyqad
Aspen Zyqad
Kbas
e
Equipment API
Electronic
Equipment
List
MHCD
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Conclusion
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Market demands us to do it better, cheaper, faster
=> Automation
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Estimating has great desire to connect to Engineering
– ! Controlled manner, considering status of project definition
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Engineering should have desire to connect to Estimating
– Estimate is Base Line Document
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Kbase API’s provide great capabilities
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? Can ISO 15926-4 help further developments, considering :
– Estimating (in)dependency
– Accuracy of an estimate is not driven by details
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Capital Cost Estimating
@ Fluor
June 2006
Arjen Blok
Thank you for you attention
Chief estimator Haarlem