Capital Cost Estimating @ Fluor

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Capital Cost Estimating_at_ Fluor

• June 2006

Arjen Blok Chief estimator Haarlem
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Fluor Overview

• 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
• 37,000 employees worldwide
• Offices in more than 25 countries
• Major European offices
• Haarlem, the Netherlands
• Madrid, Spain
• Camberley,UK and
• Gliwice, Poland.
• Consistently one of the worlds safest
  contractors

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Presentation purpose

• EPC contractors current outlook
• EPC contractors view on Estimating
• Integration of Estimating tools in engineering
  environment
• Aspen Kbase solution

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EAME Market Summary

• Strong Upstream Oil and gas markets
• 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
• Refining upgrades/capacity expansions, new plants
  in Middle East
• 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
• Chemical/plastics opportunities developing
• Chemical markets may be peaking, downturn
  expected 2009 - 2011

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EAME Market Summary

• Power Generators focus on capacity shortages /
  fuel supply
• Carbon Agenda drives environmental upgrades,
  emissions trading
• European Union market deregulation, MA activity
  
• Nuclear new-build debate
• Market risks
• Shortage of skilled personnel
• Geopolitics / political instability
• Feedstock / material costs
• Regulatory / environmental issues
• Contractor Issues
• 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

• Selectivity
• Business risk assessment
• Early indication of cost for investment and
  pursuit decisions
• Lump sum conversion contracts
• 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
• Supply chain management, global procurement for
  equip. materials
• Price instability risk
• Out of sequence engineering
• Increased focus on quantities

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EPC contractor view on Estimating

• Why preparing estimates
• Bidding work
• EPCm Services
• EPC
• Service in project development
• Support investment decisions
• Project execution basis
• Capex Cost only
• Engineering
• Procurement equipment materials
• Prefabrication
• Erection (up to Mechanical Completion)

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EPC contractor view on Cap Cost Estimating

• Fluor follows AACE classification rules 18R-97

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EPC contractor view on Cap Cost Estimating

• Estimating tool AspenTech Kbase
• Design estimating tool, provided with
• Scope Construction models, Design rules
  Engineering rules of thumb gt 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)
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Estimating data flow
Kbase
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Connection IDB -gt Kbase

• AspenTech solution API
• Application Programming Interfaces
• Allows automated data sharing in a controlled
  manner
• 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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Fluors APIs
Kbase
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Equipment API

• Obtain Equipment data from Kbase to Excel
• Import data from Excel file back to Kbase
• 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
Kbase
Equipment API
Electronic Equipment List
MHCD
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Conclusion

• Market demands us to do it better, cheaper,
  faster
• gt Automation
• Estimating has great desire to connect to
  Engineering
• ! Controlled manner, considering status of
  project definition
• Engineering should have desire to connect to
  Estimating
• Estimate is Base Line Document
• Kbase APIs provide great capabilities
• ? 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_at_ FluorThank you for
you attention

• June 2006

Arjen Blok Chief estimator Haarlem