The document discusses project control for medium-size oil and gas downstream projects. It covers scheduling and progress control, including establishing an optimized project schedule, measuring and reporting on progress, and taking corrective actions if delays occur. Cost control objectives like keeping the project budget under control through appropriate tools and defined roles are also addressed. Communication of project status is emphasized as critical for performance.

1. Management of Medium-Size /
Revamping Projects
Oil & Gas Downstream Projects
8. Project Control
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Management of Medium-Size /
Revamping Projects: course content
I. Introduction
II. Preliminary Studies
III. Basic Engineering (or FEED)
IV. EPC Contracting
V. Organization and Engineering
VI. Procurement
VII. HSE, Quality and Risk Management
VIII. Project Control (cost/schedule)
IX. Construction and Fabrication Management
X. Completion / Commissioning / Start-up / Closure
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Module 7 Contents
1. Project control 04 - 06
2. Scheduling and progress control 07 - 26
3. Cost estimating and control 27 - 55
ATTACHMENTS (slides 56 to 82)
I. WBS and Schedule examples
II. More about Progress Control
III. Cost Reporting details/examples

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Project Control
Scope / Objectives
 Scope:
• Engineering, Procurement and Construction stages of the project
(including main Contractor, Subcontractors and Suppliers)
• Mainly Cost and Schedule (for HSE and Quality: see previous chapter)
 Schedule Control objectives:
• Establish an optimized project schedule, accepted by all contributors
• Determine constraints and critical path
• Define method to measure progress, and apply it throughout execution
 Cost Control objectives:
• According to Owner cost structure, produce an optimized Cost Estimate
• Make sure the budget is kept under control
− Using appropriate tools
− Defining roles and responsibilities at all levels

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Project Control
Process
(Monthly)
SCHEDULE
STATUS LINE
(Monthly)
PROGRESS
CALCULATION
(Monthly)
COST
CALCULATION
Trend Analysis
Baseline
Schedule
Schedule
Status
Planned
Progress
PROJECT PROGRESS
CONTROL SYSTEM
(Activities weights
USD, mhrs)
PROJECT
SCHEDULE
SYSTEM (e.g CPM)
PROJECT COST
CONTROL SYSTEM
(USD)
Actual
Progress
Progress Analysis
Progress Forecast
Initial
Budget
Cost Analysis Cost
Forecast
Expenses &
Committments
CONTROL
ACTION
CONTROL
ACTION
CONTROL
ACTION
« FEEDBACK »
PROCESSES
PROJECT
WORK
BREAK
DOWN
(WBS)
STRUCTURE:
Activities
Split

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Project Control
Communication / Reporting
 Frequent communication / reporting is critical for performance
 It enables the Project Manager to obtain
• A clear picture of the Project progress vs budget and schedule
• A timely identification of adverse trends / threats
 It allows the Project Team:
• To react and take immediate corrective actions,
• If necessary, to design strategic recovery plans
• To communicate with Owner and avoid last-minute surprises
 Cost and Schedule can be both critical (but it depends on contract type)
• To Owner (more often, Schedule)
• To Engineering Contractor (more often, Cost)

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Scheduling and progress control
 Owner Scheduling
• Work Breakdown Structure
• Scheduling, Schedule levels
• Critical path
• Schedule revisions
• Scheduling tool
 Contractor Scheduling
• Same content as above
 Progress Control
• Progress measurement
• Recovery Plan
• Schedule re-baselining

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Owner Scheduling
Work Breakdown Structure
 The objective of the WBS is to provide an organised structure
covering the whole content of the project and to include, at
different levels of detail, the information necessary to monitor,
control and correctly report all project activities
 The project WBS takes consideration of:
• Project configuration (size, geographical and technical nature)
• Project management considerations (split of responsibilities, contracting
strategy / packages, reporting requirements)
 It is generally organized (for an EPC schedule), by:
• A geographical divisions: Work Packages / Areas / units
• Work subdivisions (engineering disciplines, construction trades...)
See examples in Attachment I

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Owner Scheduling
Purpose
 Owner may have to prepare a Schedule for various reasons, e.g.:
• A consolidated Project schedule (Project split into several EPC packages)
• Preliminary Project schedule at pre-Project stage (Owner leader)
• Commercial reasons (e.g. external customer commitments)
• Schedule with contingency, vs. the one discussed with EPC Contractor
 Level-0 Owner schedule will generally be presented as a Bart Chart
 More detailed levels will also be developed, using PERT/CPM
 Schedule presentation will be consistent with Owner WBS

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year J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O
JACKET & FLARE 4
Basic Engineering 4
CFT - EPCI 5
Detail Engineering
Procurement 8
Construction 1
Installation
TOPSIDES 4
Basic Engineering 4
CFT - EPCI 8
Detail Engineering 10
Procurement 11
Construction & Transportation
Installation
Hook up & commissionning
PIPELINES & CABLES 3
Engineering 3
CFT 9
Procurement & transport
Installation
DRILLING & COMPLETION
PRODUCTION 27
Owner Scheduling
Bart Chart example for 4 packages

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Owner Scheduling
Schedule types
Scheduling: a fundamental task of Project Management
 In Revamp projects, Schedule and Cost can be closely interrelated
 Bar Chart: common way to prepare the first-pass schedule
• Easy to prepare, to read (condensed format, 1 line per activity)
• More difficult to see critical path and to evaluate impact of changes
 PERT (Project Evaluation and Review Technique) ... then PDM
• Determination of Critical Path
• Sequencing logics is built into the schedule
• Then, bar charts can be produced from the network

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Owner Scheduling
Schedule levels
 Level 0 – Project Master Schedule:
• Executive summary schedule used for reporting at Management level
• Frozen at Project Sanction = Initial Baseline Schedule
• Shows target dates, key milestones and main phases
 Level 1 – Integrated Project Control Schedule:
• Time-scale logic diagram
• Decision steps, contracts sequence, work package summary activities, LLIs
• Major milestones and overall project critical path
 Level 2 and 3 – Contractor and sub-contractor Schedules
• Cover all the activities/tasks of the Contracts
• All milestones necessary to control contractors’ physical progress
• Procurement of main equipment and fabrication, construction,
installation, commissioning, with the critical path

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Owner Scheduling
Links between activities and critical path
 Network is built with activities predecessors and followers &,
linked by End-Start, Start-Start, or End-End link
 Critical path: path of activities with no float
• Provides shortest project duration
• Goes through a series of activities from Project Start to Project
Completion (e.g. studies and technical evaluation, delivery of some
equipment, fabrication, site installation, hook-up, drilling)
Float
Float
Critical Path
Critical Path
Critical Path
Critical Path

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Owner Scheduling
Example: Gantt bar chart

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Owner Scheduling
Schedule revisions
 Baseline Schedule revisions performed on Project Manager
decision in case of significant changes or delays
 Detailed assessment, based on Level 2 schedule, of all remaining
activities (internal / contractors), duration & sequences including:
• Actual physical progress and achieved milestones
• Manhours progress and actual vs estimated productivity
• Upcoming Change Orders (requested or potential) impacts on
schedules
• Performance of simulation schedules and “what-if” scenario as well
as detailed schedules risks analysis performed by/with the Risks
Assessment Manager.
 Contractors may also need to revise their Baseline Schedules
which may cause a revision of Company schedule

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Owner Scheduling
Common softwares
 Scheduling: common softwares for Medium & Small Projects:
• MS-Project for small EPC projects, preliminary studies, FEED
• Primavera for EPC phase (and FEED if necessary)
 For presentation purposes:
• Level 0 (on Excel, with information extracted from Primavera Level 1)
• Level 1 or 2 only for specific critical activities
 Progress reports : often prepared with Excel

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Contractor Scheduling
Differences
 Scheduling by EPC Contractor: more detailed than Owner
• A detailed WBS/OBS is prepared to define areas and work phases
for the project schedule & progress reporting
• Scheduling hierarchy generally includes 4 main Levels for the
concerned EPC contract, plus many sub-level schedules
 Contractor responsibility on schedule compliance
• Depends on the contract type (and therefore on Owner priorities)
• May have financial consequences for him (or not)
 Owner control on Contractor progress has to be applied

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Contractor Scheduling
EPC schedule hierarchy
 Level 0 schedule: Project Master Schedule: milestones dates and main work phases
 Level 1: Overall Project Schedule with, for major WBS areas:
• Engineering by discipline (major engg milestones: PIDs, Plot Plan, MTOs,
Reviews...),
• Procurement with LLIs and major equipment purchasing / delivery,
• Construction by trade, pre-com/com, milestones dates (MC, RFC, RFSU…)
• Critical path
 Level 2 schedule: Areas Schedule: CPM network; all activities according to WBS / OBS
• All engineering activities by discipline and deliverables category,
• Procurement activities for all equipment & bulks requisitions,
• Construction by trade or construction packages, pre-com / com,
• Detail critical path from CPM

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Contractor Scheduling
EPC schedule hierarchy
 Level 3: Detailed Schedules
• Engineering deliverables (usually with engineering progress measurement system)
• Procurement schedule (may be with procurement progress measurement system)
• Site Level 3 CPM construction schedule, with Level 3 construction contractor
subcontract schedules, in line with Level 2 schedule; used for progress reporting
• Site CPM pre-commissioning / commissioning schedule detailed by Areas / Units /
Systems / Tasks and used for progress reporting
• For Revamped areas: Shut-down schedules by Job Cards
A 3 months look-ahead schedule may be used for reporting

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Contractor Scheduling
Key elements to consider
 Contractual milestones for achievements of the whole project or intermediary.
 LLI (Long Lead Items), when applicable: items on the project critical path
 Global project size and engineering, procurement and construction resources
requirements versus their availability for the concerned project / site (progress
rates) will translate into required manhours at peak and feasible progress rate
 For Revamping projects: Planned shut-downs calendar times and durations
 Standard « statistic » progress curves with % completion vs. project duration in
% are available to provide a reference progress for each activity:
• Engineering by discipline (process, equipment, civil, piping, E/I/A)
• Procurement (main equipment, bulk material)
• Construction (For each trade: Civil, U/G piping, Piping pre-fabrication,
equipment erection, piping erection, instrumentation, painting, insulation)

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Contractor Scheduling
Typical critical path
 Typical critical path for an E/P onshore project usually includes:
• Long Lead Items (including erection and installation)
• Process PIDs (approved by Owner for design)
• Main equipment purchases (including inspection/transportation)
• Piping isometrics, pre-fabrication and installation
• Control loop checks at the end of construction

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Contractor Scheduling
Schedule of Revamp projects
Revamping Project Schedule is strongly influenced by:
 Production objectives vs time: new production milestones after revamp
 « Usual shut-downs » planned time and duration (need to minimize production
outage time, including upstream and/or downstream facilities)
 Work authorised during pre-shutdown phases in live facilities: if too limited,
amount of work during S/D and construction may become:
• More/very expensive
• Higher HSE/Reliability risk
• Even unrealistic  delays and/or major Quality concerns
 Consider using available Owner supervision & commissioning staff
Carefully review schedule constraints with Owner during FEED,
to avoid subsequent trouble and change orders

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Progress control
Purpose
 Compare actual progress vs schedule. Several ways:
• Milestones
• Overall physical progress
• Physical progress of the Critical Path
• Expected completion date vs plan
• Manhours progress vs detailed schedule
 Analyze trends to decide if corrective actions are necessary
 Depending on contract type, Owner validation may be required

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Progress control
Progress reporting
 Periodic Progress Reports: a key Project Management tool
 Address progress, but also all key events, problem areas and
higher level problem areas (« areas of concern »)
 Prepared:
• Daily at site (construction / pre-com / com).
• Weekly for Head Office activities and for construction
• Monthly
• Issued before periodic Owner / Main Contractor review meetings

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Prepares
Daily report (constr)
Weekly report
Monthly reprt
Feedback
Incident
Close-out
SUB CONTRACTORS
Reviews, Responds,
Consolidates Oper. Centers
& Site Reports
Alerts
Feedback
Incident
Close-out
Monitors,
Monthly
Monitors,
Recommends
Monthly
Incident
Close-out
JV
STEERING COMMITTEE
CONTRACTOR PROJECT MANAGEMENT TEAM
CONTRACTORS
CONTRACTOR
MANAGEMENT
Progress control
Progress reporting
MONTHLY MEETING
MONTHLY MEETING
COMPANY PROJECT MANAGEMENT TEAM
MONTHLY MEETING
Prepares
Daily report (constr)
Weekly report
Monthly report
Alerts
Feedback
Incident
Close-out
Prepares
Daily report (constr)
Weekly report
Monthly reprt
Alerts
Feedback
Incident
Close-out
WEEKLY MEETING
WEEKLY MEETING
DAILY MEETING (Constr.)

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Progress control
Progress reporting
Typical CONTENT
 Executive Summary
 HSE performance
 Engineering
 Procurement
 Subcontracting
 Construction
 Pre-com / Com
 Project Controls
 Quality
 Areas of Concern
 Major events, achievements, problem areas,
highlights
 HSE statistics, near misses register
 Progress S curves, tabulations: planned, actual,
forecast for Project, Work Packages, global E,
Disciplines, P, global C, C by areas/ units, C by trades
 Milestones status
 COI/COR register
 Invoices register
 Cash flow actual & predictions
 Procurement materials status reports
 NCR register
 Documents register
 Level 1 Project Schedule with progress status; Trend
analysis; recovery plan
 Manpower histograms planned & actual

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Progress control
Progress measurement
 Split project activities according to structure close to the WBS
 Define weights to each line, using adequate units (€, manhours…)
 For each Work package, aggregate these tasks by Levels :
• 1: Work-Package or sub-project
• 2: Categories: home office services, procurement, construction…
• 3: Sub-categories: engineering discipline, requisition, construction trade
• 4: Tasks: engineering deliverables, equipment, construction items
• 5: Elementary steps: drawings, fabrication, construction works
 During execution:
• Measure progress achieved for each elementary step
• Then, aggregate to the different Levels and compute overall progress
See examples/illustrations in Attachment II

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Progress control
Progress curves
0% 0% 1% 2% 3% 4% 6% 7%
9%
11%
14%
17%
20%
25%
30%
35%
40%
46%
51%
56%
61%
67%
70%
73%
76%
79%
82%
84%
85%
87%
90%
92%
95%
97%
99%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
Months
TYPICAL PROGRESS CURVES
Engineering Procurement Fabrication
Construction Commissioning Total

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Progress control
Progress curves
 Engineering « S » progress curves are prepared from Level 3 schedule
(typically during the first 3 months of the contract)
 More detailed “S” curves are prepared during Execution:
• Detailed construction / fabrication curve
• Field erection curve
• Installation / commissioning curve
 First « S » progress curves and histograms can be prepared from Level 2
schedule and manhours estimates; they allow to check that
construction scheme is realistic for construction contractors
 Until the Project EPC schedule is issued, a 3-month look-ahead schedule
is prepared to anticipate short-term schedule and resource concerns

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Progress control
Typical causes for EPC contractors delays
 Insufficient manpower resources (quantity and/or quality)
 Supplier or Subcontractors (careful on sub-sub-contracting !)
 Strikes, disturbances related to local environment
 Underestimates (manhours, bulk quantities)
 Equipment Quality unacceptable non-conformances
 Late information, comments or reviews from Owner
This list is incomplete. Other ideas ?...

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Cost Estimating and Control
• Cost estimating
• Cost reporting and control
• Change Management

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Cost Estimating and control
Scope and objectives
 Scope: Project CAPEX (OPEX is not in the scope)
 Objectives:
• Estimate the project CAPEX and propose the overall budget
• Make sure that this budget is acceptable to all contributors
− Sufficient to assure Project HSE/Quality performance
− Generating acceptable profit for each stakeholder
» Owner
» EPC contractor
» Suppliers and Subcontractors
− Consistent with the cost and schedule constraints
− Allowing adequate risk management
• Organize the Cost Reporting/Control process (involving Owner)
• Define the Change Management process (involving Owner)

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Cost Estimating
Budget
 Any Project has a controlled and approved Budget
 The Budget may be adjusted (Revised Budget) during the Project Life:
• Budget transfer from other projects
• Scope deletions or additions, approved by Owner
 Structurally, the budget is expected to increase as Project develops
 At the end of the Project:
• Cost analysis will establish the “Final cost”
− After Mechanical Completion and Handover
− Once claims are settled and invoices paid
• The final Cost Control report is issued
• Comparison with Revised Budget allows to draw feedback lessons

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Cost estimating
Methodology

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Main Equipment
Bulk
Fabrication/Construction(onshore/offshore)
Engineering Services
Management & Supervision
Surveys
Transportation
Temporary Facilities
Construction camps
Insurance
Commissioning
Direct Costs
Contingencies
Facilities Cost Estimate
Indirect Costs
General
Expenses
Associated Expenses
+
+
+
+
=
Direct Costs + Indirect Costs = Technical Costs
Cost estimating
Structure
Fabrication / Construction cost are the highest costs and the most difficult to estimate,
in particular for works in revamped process units and brown field; they are very site dependent (productivity)

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Cost estimating
Preliminary Estimate: a Challenge
 CAPEX estimate usual desired accuracy is +/- 30% for « new » or « expanded »
parts of projects in existing facilities, which may be relatively easy if the Plant
is recent and cost data base available or difficult depending on:
• Project complexity and location
• Onshore or Offshore projects
• Concerned facilities
• Modifications to facilities (Expansion, Debottleneck, Upgrade, Revamp)
 The CAPEX estimating method will depend on:
• Cost data base (Owner and/or Contractor) for works at that location
• Nature of facilities (onshore or offshore, subsea or surface, new or
revamped process units, interconnecting with work in brown field…),
 The CAPEX estimate should be prepared with a memorandum underlying
assumptions, estimating methodology, uncertainties and risks

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Cost estimating
Preliminary Estimate: a Challenge
 Estimating methods are global as project details such as P&IDs are not prepared; the
estimating methodology will combine available cost data base and estimating tool box.
 Estimators use cost data breakdowns, unit costs, etc. from similar recent project units at
the location, or at similar (in terms of cost) location, with corrections for location
(importance of construction cost), escalation, and other foreseen different project
conditions. (Often the estimators will use units information from several projects).
 Many « factors » are used for so called « factored estimates »:
• Scaling factor: P1 / Po = (C1 / Co)0.65
• Factored estimate from equipment cost: P installed= K x P equipment
K may range from 2 to 6 depending on equipment type
For revamped areas an other K1 factor is to be applied on top
• Global factor on top of Direct Costs: Total cost = K x Project Direct Cost
• A cost factor can be used for transportation (onshore projects)

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Cost estimating
Preliminary Estimate: a Challenge
 Cost information is gathered from all possible sources at the time, e.g:
• Major / special equipment or packages (glycol treatment, water
treatment, utilities and power packages, etc.): prices from Vendors
« budget » quotes.
• Interconnecting preliminary quantities estimated by engineering from
preliminary MTOs & unit costs used from previous project at the facilities,
for bulks cost & for construction cost; quotations from Vendors for large
pipe / pipelines
• Engineering, construction supervision manhours may be estimated by
ratios.
• Contingencies or CRP (Contingency, Risks and Profit) factor, added on top
of estimate

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Cost estimating
CAPEX estimate during FEED
 CAPEX estimate prepared according WBS/OBS; desired accuracy +/- 15%
 Estimate is Quantities x Unit Costs
 Construction cost is all-in construction mhrs rates x construction mhrs
 Construction cost: the most important cost item, the most difficult to estimate
 CRP (Contingency, Risks and Profit factor) is added on top of the cost estimate
 CAPEX estimate prepared with a memorandum underlying assumptions,
estimating methodology, uncertainties and risks.
 Estimating methodology principles are presented on next slides

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Cost estimating
CAPEX estimate during FEED

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Cost estimating
CAPEX estimate during FEED

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Cost Control process
Owner perspective
 Owner cost control process and involvement in tracking cost
components depends on the type of EPC contract
 If a contract is on Reimbursable basis, Owner will have access to
all cost elements and is responsible for the complete Project cost
 If a contract is on a Lump Sum basis, Owner will have access only
to the cost items specified in the contract
 Owner will have access to the cost estimate to support change
orders, approve them, and include them to Cost Control process

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Cost Reporting and Control
Forecast
 Purpose : determine the Forecast to Complete
 Cost Forecast is updated on a regular basis (typically, monthly)
 Cost Forecast may anticipate on non-finalized commitments
 Cost Forecast requires a good knowledge of technical matters
 Cost Forecast may introduce some budget transfer
 Cost Forecast includes proper management of Contingencies
• Advisable not to consume them during the early stages
• Corporate rules (Owner and/or Contractor) may exist
• The Project Manager has ultimate authority

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Cost Reporting and Control
Organisation principles
Cost control organisation includes mainly:
 Cost Control Manager, assisted by Cost Controllers depending on
Project size, responsible for global project cost control and
reporting to operationally to the Project Control Manager and
functionnaly to the Contractor Management (in case of a JV, will
report to JV Project Manager on one hand and, on the other
hand, to Partner Management within its own organisation, issues
being then adressed if necessary by the JV Steering Committee)
 Site Cost Control Manager responsible for cost control at the site
and reporting operationnally to the Site Manager but functionally
to the Cost Control Manager
 Cost Estimators to estimate project cost changes and reporting to
the Project Control Manager

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Cost Reporting and Control
Cost Controller duties (1/2)
Mainly coordinates with:
 Engineering and scheduling / progress control organisations to control engineering
manhours cost expenditure, planned mobilisation and trends from productivity
and personnel mhrs rates, and to control bulks quantities trends considering
MTOs vs their engineering documents basis
 Procurement to control Vendors offers versus budget (advise budget target before
negotiations, check and approve CBTs and Vendor price), and track P.Os change
trends
 Fabrication / construction contracts management to control cost and trends versus
budget (before transfer of construction contracts administration the site)
 Site cost control to control site costs and trends
 Project Management for allocation and use of technical cost contingencies or
global project risks provisions
Prepares costs expenses reports, forecast and monthly cost reports; also prepares
change orders

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Cost Reporting and Control
Cost Controller duties (2/2)
Mainly Coordinates with:
 Fabrication / Construction / Pre-com / com Management to control site
supervision cost (mobilised cost, planned mobilisation, daily rates costs...)
 Site Contracts Administrator(s) / quantities surveyors and Scheduling /
Progress Control Manager to control current construction cost, establish
forecasts from anticipated quantities variations, productivity, and additional
work orders
 Site procurement for local purchases
 Site Administration Manager for site running costs control (accommodation /
camps, TCF...)
 Prepares back-charges to Vendors and Construction Contractors as applicable,
insurance claims in case of damages during transport or at site
 Prepares site costs expenses reports, forecast and monthly cost reports; also
prepares change orders

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Cost Reporting and Control
Periodic actions
 Day-to-day:
• Review work progress and consistency with contract terms
• Inform Management of any non-budgeted items
• Review all invoices received and consistency with contract terms
 Typically on a monthly basis:
• Calculate the escalation formulae and price revisions, if any
• Manage the various provisions
• Review the estimate to complete and the final forecast
 Less frequently (quarterly, annually, or ad hoc):
• Formal reporting to EPC Management, Owner and Partners
• Regulatory reporting if applicable (e.g. tax)
• Propose budget revisions

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Cost Reporting and Control
Keys of effective cost control
 Timely and serious estimate of Engineering Manhours
 Bulk Quantities estimate based on complete detail engineering
 Check of Suppliers and Fabrication/Construction contracts:
• Estimates based on up-to-date verified info
• Actual costs timely compared to estimate, and challenged
• Rigorous Procurement procedures, no by-pass
 Schedule changes: careful about cost consequences
 Rigourous Change Management
 Accurate and timely Reporting / Forecasting to Management
 Timely followup of cost control actions decided by the team

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Management of change
Process
Management of Change
Covers all changes to contract
Engineering Deviation Requests
• Cover deviations to contractual
reference standards or already
Approved Design Specifications
• Written Procedure
• Deviation Requests Register
• Clear Owner approval authority
Change Order Procedure
• Covers Additions, Modifications
and Deletions to Project scope,
with impact on Project cost,
schedule, process performance
• Procedure includes:
− Change Process
− Change Orders Log
− Approvals
• Change Requests Register

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Management of change
Deviation requests/engineering queries
 Clarify or ask a deviation to a contractual document, for the purpose of
developing the detail engineering and procurement requisitions
Usually due to:
• Conflicting requirements in different documents
• Proposal of an engineering improvement
• Required materials not consistent with local availability
 Ask a deviation to already approved requisition documents
Usually due to:
• Proposal of a supply improvement
• Availability of raw materials different from requirements
• Vendors fabrication or test standards different from requirements
• Standard packages or skids

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Management of change
Change order procedure
A “Change Order” is not an anomaly
• When cost variations are not due to Contractor and potentially give rise to
a Change Order: Contractor notifies Company and prepares a Change
Order Request (COR) with an estimate and formal request to be usually
submitted within 2 weeks maximum to Company.
• Company may also need to change the scope, or to exert Options provided
under the contract, or for any reason to ask Contractor to change its work
thru a Change Order Instruction (COI). Company then notifies Contractor
with an estimate to be usually submitted within 2 weeks maximum to
Company.
• Change Orders are monitored by the Project Cost Management team and
recorded as soon as they are identified on a Change Order Register.
• Change Orders estimates are evaluated by the Contractor (using contract
unit costs as available), and checked by Company Cost Management team.
• Change Orders need to be formalized and agreed by all Parties and will
therefore be transferred to Project budgets (Company and Contractor)
only after Approval by Company.

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Management of change
Cost trends caused by Owner
 Project definition unclear or incomplete
 Scope changes during execution
 Delayed access to construction areas
 Missing elements or information
 Wrong assumptions on market costs
 Unclear interfaces between contractors
 Conflicts with EPC Contractor, or Suppliers, or Subcontractors
 Insufficient quality of Project Management Team
 Delays in achieving Owner tasks

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Management of change
Cost trends caused by Environment
 Unplanned inflation rate or exchange rate changes
 Weather catastrophy (cyclones, flooding, earthquakes)
 Political trouble (strikes, wars, unplanned regulatory changes)
 Delays to obtain working visas
 Unexpectedly low productivity due to bad weather
 Unforeseen difficulties (soils or sea bed conditions)

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Management of change
Cost trends caused by EPC Contractor
 Initial Price too low
 Insufficient qualification of Project Management Team
 Inability to forecast on time
 Sub-contractors lack of performance
 Estimating errors (incomplete/incorrect technical info)
 Insufficient provisions or contingency
 Missing cost elements
 Wrong assumptions on supplier/subcontractor markets

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Key points to keep in mind
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Project control
 Owner has a critical role in controlling EPC Contractor performance
 This role depends on the contract type but is always to be assured
 Scheduling:
• May be quite critical on Revamping projects (shutdown windows)
• Smaller projects need simpler tools
• Critical path should be clearly identified and optimized
 Cost estimating:
• Up-to-date cost databases are a key to effective estimating
• Accuracy of Cost Control estimate should be around 10%
• Estimate used for approval (FEED stage) should be based on quantities
 Cost and Schedule control:
• Monitoring methods should be clearly defined in the EPC contract
• For Revamping projects, may be closely inter-related

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ATTACHMENTS
I. WBS and Schedule examples
II. More about progress control
III. Cost reporting details/examples

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ATTACHMENT I
WBS and Schedule examples

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ATTACHMENT II
More about Progress Control

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Principle split
% according to USD values
OVERALL
PROJECT
WORK PACKAGE 1 WORK PACKAGE 2
HOME OFFICE MANUFACTURING CONSTRUCTION AND HOME OFFICE MANUFACTURING CONSTRUCTION AND
SERVICES DELIVERY PRECOMMISSIONING SERVICES DELIVERY PRECOMMISSIONING
15% 35% 50% 15% 35% 50%

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Principle split – Weights sample onshore
% according to mhrs for services and USD for procurement

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FPSO 28,6%
TOPSIDES
Engineering 10,6%
Procurement 34,2%
Construction 16,8%
Integration 3,3%
Towing FPSO & Flotel 2,1%
Tie-in precomm and Comm 1,8%
HULL & L Q 31,2%
SPS 14,3%
Engineering 4,0%
Procurement 22,1%
Manufacturing 67,3%
Systems Testing 3,3%
Transport 3,3%
UFR 24,5%
Engineering 4,5%
Procurement 36,2%
Construction 14,5%
Offshore Installation 27,8%
OLT 17,0%
DRILLING 32,7%
Drilling Rig 42,8%
Rig Contract Services 57,2%
TOTAL 100,0%
Progress measurement: Weighting sample offshore

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Recovery plan example: loss of mobilisation at year end
and drifting
ACTUAL PROGRESS
ON TIME UNTIL END DEC.
BUT DRIFTING
RECOVERY PLAN:
INCREASE MOBILISATION
TO INCREASE PROGRESS

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Project Schedule sample: Gas Plant 2 Trains extension and
upgrade – S/Ds Planning
One
major S/D
initially
Four S/Ds
at actual
EPC time
start

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Progress curves: Schedule Baseline Revisions

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JC preparation progress curve
Preparation of JCs may take several months: procedure for
preparation, progress control to be implemented

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Fabrication scheduling

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Scheduling transportation to site
 Transportation to site of the main components is not very difficult
by itself, but the coordination of this activity can be a real
challenge
 The speed of the spread(s) transporting the main components is
directly calculated from the distance and the marine spread
speed + some provisions for bad weather, adverse wind, …
 The capacity of the transportation barge or vessel must be
assessed carefully: transporting 2000 tons, 5000 tons or even
30000 tons is a case by case study

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Scheduling offshore installation
Initial scheduling of offshore installation requires:
 Detailed analysis of the scope: number and main characteristics
of all modules / decks / jackets / pipelines / floating storage…
 Evaluation of the marine construction equipment required:
• Derrick barge – crane capacity
• Pipe Laying Barge – stinger – max pipe size – type of welding
• Offshore tie-in means: ROV…
• Trenching, shore approach equipment
• Drilling rigs type…
The schedule will be reviewed after contractors selection

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Scheduling offshore installation

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Scheduling hook-up
 Hook-up time is highly dependant upon the yard fabrication and
its level of completion
 It is fundamental to reduce as much as possible the hook-up
work: hook-up is very costly and always critical
 No hook-up without accommodation
 No hook-up without a good logistic and supporting equipment

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ATTACHMENT III
Cost Reporting details/examples

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* Level 0 = Project
1 = Phase
2 = Major Work Split
3 = Commitment
4 = Work Package
Company Cost Report Format Principles
Project Level*
Description
(1)
Approve
d
Budget
(2)
Scope
Change
(3)
Budget
Transfer
(4)
Current
Budget
(1+2+3)
(5)
Commit
(6)
Estimate
To
Complete
(7)
Forecast
(5+6)
(8)
Variance
(+/-)
(4-7)
(9)
Expend.
Incurred
(10)
Approved
Invoices
AFE
X
Y
Z
100
50
90
0
0
0
0
10
- 10
100
60
80
90
60
80
12
0
- 5
102
60
75
2
0
- 5
70
60
73
65
60
65
Sub-total 240 0 0 240 230 7 237 - 3 203 190
Provisions
Contingen
cy
24 0 0 24 0 22 22 - 2 0 0
Total 264 0 0 264 230 29 259 - 5 203 190

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(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
CODE DESCRIPTION
APPROVED
BUDGET
SCOPE
CHANGE
BUDGET
TRANSFER
CURRENT
BUDGET
(1+2+3)
COMMITMENT
ESTIMATE to
COMPLETE
FORECAST
(5+6)
Variance
(+/ -) (7-
4)
Expenditure
Incurred
Approved
Invoices
100 Initial Studies 13350 0 0 13350 13350 0 13350 0
200 Wellhead Connect. 54550 0 0 54550 51550 3000 54550 0 30 26
300 Production Pltf 137320 0 -10000 127320 118380 8940 127320 0 12760 10000
400 Quarter Pltf 37070 0 -500 36570 34500 2070 36570 0 6383 5073
500 FPSO 42430 0 2700 45130 43170 1960 45130 0 18823 16450
600 Buoy & Sealines 12900 0 0 12900 0 12900 12900 0 45 42
700 Management 5600 0 0 5600 0 5600 5600 0 15 15
Sub-Total 303220 0 -7800 295420 260950 34470 295420 0 38056 31606
800 Provisions (rate) 2100 0 -10 2090 0 2090 2090 0 10 10
900 Contingency 12430 0 0 12430 0 12430 12430 0 0 0
**** TOTAL 317750 0 -7810 309940 260950 48990 309940 0 38066 31616
PROJECT: ANGELA PAPYRUS
LEVEL 0
TOTAL E&P XXXX
DATE: OCT 2003 ALL IN k US$
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
CODE DESCRIPTION
APPROVED
BUDGET
SCOPE
CHANGE
BUDGET
TRANSFER
CURRENT
BUDGET
(1+2+3)
COMMITMENT
ESTIMATE to
COMPLETE
FORECAST
(5+6)
Variance
(+/ -)
(7-4)
Expenditure
Incurred
Approved
Invoices
210 Gen. Mngt & Serv 2200 0 0 2200 2200 0 2200 0 350 0
220 Engineering 4400 323 0 4723 4523 200 4723 0 0 0
230 Mal & Eqpt supply 8500 645 0 9145 9045 100 9145 0 0 0
240 Onshore fab 22500 1682 0 24182 23582 600 24182 0 0 0
250 Transportation 3550 0 0 3550 3450 100 3550 0 0 0
260 Offshore Works 16500 0 -500 16000 15800 200 16000 0 0 0
270 Hook-up Wks 6200 0 0 6200 6000 200 6200 0 0 0
280 Commissioning sup 3200 0 -1800 1400 1000 400 1400 0 0 0
290 Spare parts 950 0 -350 600 550 50 600 0 0 0
2*** TOTAL 68000 2650 -2650 68000 66150 1850 68000 0 350 0
PROJECT: ANGELA PAPYRUS
LEVEL 1 WELLHEAD PF & CONNECTION
TOTAL E&P XXXX
DATE: OCT 2004
ALL IN k US$
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
CODE DESCRIPTION
APPROVED
BUDGET
SCOPE
CHANGE
BUDGET
TRANSFER
CURRENT
BUDGET
(1+2+3)
COMMITMENT
ESTIMATE to
COMPLETE
FORECAST
(5+6)
Variance
(+/ -)
(7-4)
Expenditures
Incurred
Approved
Invoices
310 Long lead Items 28630 0 -4200 24430 24430 0 24430 0 4800 2400
320 Gen. Mngt & Serv 2640 0 0 2640 2400 240 2640 0 240 240
330 Engineering 4680 0 -700 3980 3600 380 3980 0 720 360
340 Mal & Eqpt supply 45840 0 -5100 40740 40300 440 40740 0 4500 4500
350 Onshore fab 16480 0 0 16480 16150 330 16480 0 2500 2500
360 Transportation 4500 0 0 4500 4500 0 4500 0 0 0
370 Offshore Works 18000 0 0 18000 14500 3500 18000 0 0 0
380 Hook-up Wks 8500 0 0 8500 6200 2300 8500 0 0 0
380 Commissioning sup 4850 0 0 4850 3800 1050 4850 0 0 0
390 Spare parts 3200 0 0 3200 2500 700 3200 0 0 0
3*** TOTAL 137320 0 -10000 127320 118380 8940 127320 0 12760 10000
PROJECT: ANGELA PAPYRUS
LEVEL 1 Production Platform
TOTAL E&P XXXX
DATE: OCT 2004
ALL IN k US$
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
CODE DESCRIPTION
APPROVED
BUDGET
SCOPE
CHANGE
BUDGET
TRANSFER
CURRENT
BUDGET
(1+2+3)
COMMITMENT
ESTIMATE to
COMPLETE
FORECAST
(5+6)
Variance
(+/ -)
(7-4)
Expenditure
Incurred
Approved
Invoices
410 Long lead Items 2560 0 0 2560 2560 0 2560 0 2560 1250
420 Gen. Mngt & Serv 1200 0 0 1200 1200 0 1200 0 240 240
430 Engineering 2150 0 0 2150 2050 100 2150 0 410 410
440 Mal & Eqpt supply 12720 0 -250 12470 11890 580 12470 0 2600 2600
450 Onshore fab 6140 0 0 6140 5725 415 6140 0 573 573
460 Transportation 2200 0 0 2200 2125 75 2200 0 0 0
470 Offshore Works 5400 0 0 5400 5100 300 5400 0 0 0
480 Hook-up Wks 3600 0 -250 3350 2950 400 3350 0 0 0
480 Commissioning sup 800 0 0 800 600 200 800 0 0 0
490 Spare parts 300 0 0 300 300 0 300 0 0 0
4*** TOTAL 37070 0 -500 36570 34500 2070 36570 0 6383 5073
PROJECT: ANGELA PAPYRUS
LEVEL 1 Quarter Platform
TOTAL E&P XXXX
DATE: OCT 2004
ALL IN k US$
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
CODE DESCRIPTION
APPROVED
BUDGET
SCOPE
CHANGE
BUDGET
TRANSFER
CURRENT
BUDGET
(1+2+3)
COMMITMENT
ESTIMATE to
COMPLETE
FORECAST
(5+6)
Variance
(+/ -)
(7-4)
Expenditure
Incurred
Approved
Invoices
510 Purchase Hull 12500 0 1500 14000 14000 0 14000 0 14000 14000
520 Gen. Mngt & Serv 1500 0 0 1500 1400 100 1500 0 240 240
530 Engineering 3650 0 0 3650 3500 150 3650 0 410 410
540 Mal & Eqpt supply 10200 0 0 10200 9900 300 10200 0 3600 1800
550 Onshore fab 6500 0 0 6500 5900 600 6500 0 573 0
560 Towing 1800 0 0 1800 1800 0 1800 0 0 0
570 Offshore Works 2500 0 0 2500 2200 300 2500 0 0 0
580 Hook-up Wks 2280 0 1200 3480 3100 380 3480 0 0 0
580 Commissioning sup 1100 0 0 1100 970 130 1100 0 0 0
590 Spare parts 400 0 0 400 400 0 400 0 0 0
5*** TOTAL 42430 0 2700 45130 43170 1960 45130 0 18823 16450
PROJECT: ANGELA PAPYRUS
LEVEL 1 FPSO & BUOY
TOTAL E&P XXXX
DATE: OCT 2004
ALL IN k US$
Cost monitoring example